Here again the Chinese are responsible for

The base metal the Treaty on the London Metal Exchange (LME), aluminum, is experiencing a difficult pass. Since the beginning of the month of June, the course of 3 contract months fail to extricate lasting band between 2,400 and 2,600 dollars per tonne. This ceiling of $ 2,600 yet is withdrawal of 18 on the above listed may 11, ($3.185). The excellent session last Thursday, which was led by an advance of 2.9 of white metal, had revived hopes of a rebound. Hope bolstered both by the decline of the LME stocks, today approximately 360,000 tons ( 15 per cent from the peak of the year from May 30) and the consequent increase in cancellations of warrants (1). But these two facts, certainly positive for prices, are not enough to defeat the opposing forces much more vigorous action. First, the rapid acceleration of the available supply.

According to the latest statistics of the international Institute of aluminum (IIA), the world production of this non-ferrous reached the record volume of 2,823 million tonnes in August. The eight months of the year, the overall throughput of the metal amounted to 21,717 million tonnes, or 6 more than in 2005 at the same time. China, alone, has provided approximately 72 of 1,213 million additional tonnes (876.000 tonnes). As noted by Nick Moore, an economist at ABN AMRO, "closures of refineries in the United States and Europe have been more than offset by new production capacity in movement in China and the Middle East."

Capacity increases

The severe slump of the alumina prices (or bauxite from aluminum oxide), raw material of aluminum electrolysis, is explained essentially by the flight of the Chinese production. A few months, spot prices have melted more than 55, erasing the entire 2006 earnings and falling to levels abandoned since mid-2003. Here again, the Chinese are responsible for. Between January and July, providing grew 51 on an annual basis, at a monthly rate now exceeds 1 million tonnes. According to ABN AMRO, China's alumina production essentially provided by the mining company Chalco is expected to grow from 46 in 2006 to 12,396 million tonnes and 23 the year next to 15,252 million tonnes. This product, which is traded in the first half of 2006 at a price average spot of 595 dollars per tonne, could plunge 308 dollars per tonne in second part of the year, forward Nick Moore.

Despite this evolution of the courses, "increases in capacity are likely to continue" certifies expert. Alumina prices lower leads in turn to higher rates of use of equipment for the production of aluminum. In total, the overall supply of white metal in 2006 is increase in proportions roughly comparable to those of 2004 and 2005 ( 6-7), with 34 million tonnes.

On this basis and by relying on a global consumption of 34.25 million tonnes, the market would show a deficit reduced to some 250,000 tonnes in 2006 to become low surplus in 2007. If these forecasts are correct, the price of aluminum has little rebound margin. However, the possibility of a collapse is not the most likely scenario. Because consumption continues to grow at a respectable pace which prevents the recovery of stocks.