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Aluminium – market overview in September 2015.

01 October 2015
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Aluminium market slightly recovered from the shock experienced in August, when the price of only $ 1,485 / t was recorded – the lowest price of aluminium in six years. Today, the price is slightly higher, at about $ 1,550 /t, but many think that the worst is not over yet. According to some projections, the price of aluminium could fall to a record low price once again, and then a slow recovery would start, which would raise the price to 1,800 US dollars per ton in 2018.

 

What impact has the low price of aluminium on manufacturers?
The most sensitive company on the change in the price of aluminium is Australian giant Rio Tinto. According to published estimates, 10 % decrease or increse in price of aluminium, takes or gives 441 million dollars.
Alcoa on the other hand expects their profit to rise by 190 million US dollars for every $ 100 / t aluminium price increase. Of course, the same calculation can be applied in the opposite direction. Because of this negative trend, which reduces the value of shares, Alcoa had decided to divide the company into two new joint stock companies to ensure a stable value of the shares.
Europe's largest aluminuim manufacturer Norsk Hydro calculated that their revenue before tax rises or falls by about 390 million US dollars in case when aluminium prices rises or falls by 10%.

 

According to analysts reports this low price of aluminium is not favorable neither to Chinese producers of primary aluminum. Many of them have losses, as reflected in reduced production and exports. China has in fact reduced the production capacity by 2 million tons per year.

Regarding the growing demand for aluminium, and the stabilized prices, the Norsk Hydro believes that this is a good opportunity to takeover a market share from China, so they increased its production capacity by 30%.

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