Aluminium insights: End of year reflections
As the year is coming to an end, I’d like to take this opportunity to wish everyone a nice holiday season, however you’ll celebrate it. I’d also like to thank all our subscribers to our aluminum insights newsletter for their support – after every Aluminum Insights issue we’ve received hundreds of new subscribers and we now total over 1300 readers. In the link below, you can see the most read articles from this past year:
Check out all our articles published in 2019 and subscribe to the Aluminum Insights newsletter on our website: https://www.outotec.com/company/newsletters/aluminum-insights/
This past year has been a turbulent one for the aluminium industry. Primary aluminium prices on the LME have remained at low levels compared to 2018, suppressed by deflating demand expectations and better than expected inventory levels. The question throughout the year has been what the true supply and demand balance
in China is. Exports from China have remained persistent, but the expectation
has been that inventories were eaten, and all the signs of steady inventory
levels in the country have been received negatively by the markets. At the same
time, there is an interesting discrepancy that has developed between the SHFE
and LME prices, which should ultimately start reducing exports and many market
analysts are expecting LME sentiment to also pick up in 2020. China has
continued its push for replacement capacity and for more environmentally
sustainable production. This has been evident in some of the production
curtailments seen and the planned replacement capacity in areas with hydro
power. Meanwhile in the West, there is increasing talk about sustainable
aluminium, with many producers joining the ASI and calling for introducing
additional classes of aluminium on the LME based on carbon footprint. All these
initiatives are welcome – at the same time it’s important to remember that
even with existing technology, there’s a lot that can be done to clean up the
environmental footprint of aluminium production both directly through pot line
improvements and indirectly by, for example, making better anodes and rodding
them more efficiently.
The
future for aluminium as a material remains strong, and I’m encouraged by the
relentless efforts of many of our customers to continuously improve their
operations. In alumina, prices started high, but have deflated during the year
as many production curtailments that hit markets earlier have subsided,
providing some help to non-integrated aluminium producers. Here too, energy
efficiency is key, and solutions exist to improve that with quite small
investments.
The
Outotec alumina and aluminium teams have also had a busy year. We are
finalizing two major projects in the Middle East and remain busy especially in
equipment modernizations as well as developing our suite of digital products.
Some of our readers may have noticed the last week’s news that Outotec will be
divesting its aluminium business. This means that our alumina business will
continue as part of Outotec, who heads towards a merger with Metso in 2020,
while for our aluminium carbon area and casthouse technologies the intention is
to find a new home without delay. While the exact timeline of this transaction
is not yet known, I want to make it clear to everyone that Outotec stands by
all its existing and future commitments, and our aluminium team remains as
committed as ever to serving our customers as we have over the past decades. We
are very much open for business and excited about what the 2020 has in store.
Should you have any questions, please feel free to drop me a line.
All the
best for the coming year!