Global Aluminum Industry: Review and Forecast, The

As global demand for aluminum remains strong, worldwide aluminum production continues to rise. In 2006, global production of primary aluminum reached 33.1 million t, up from 31.9 million t in 2005, according to the U.S. Geological Survey's (USGS) Mineral Commodity Summaries. China continued to lead the world in both production and consumption of primary aluminum, while high energy costs caused U.S. production to continue its steady decline.

China produced 8.7 million t of primary aluminum in 2006, up from 7.8 million t in 2005, according to estimates by the USGS. Russia followed with 3.7 million t, a slight increase over 2005. Canada, the United States, and Australia rounded out the top five production countries in 2006. producing 3, 2.3, and 1.9 million t, respectively.

Of these five countries, only the United tales showed a decrease in production in 2006, dropping from 2.48 million t to 2.3 million t. This continues a gradual but steady decline for U.S. production over the past five years. In 2006, 13 primary aluminum smellers operated in the United States, and six other smelters were idled.

Aluminum companies continue to plan new smelter capacity in areas with lower energy costs. U.S.-based companies Alcoa and Century Aluminum are building new smelter capacity in Iceland. Canada's Alcan is planning new plants in Oman and South Africa. Norway's Norsk Hydro has plans for a new smelter in Qatar, while London-based Rio Tinto is exploring possibilities with the United Arab Emirates. The Aluminum Corporation of China. India's Hindalco, and Russia's Rusal and Sual Group continue to make plans for expansion domestically.

This expanded global smelter capacity will help the aluminum industry keep pace with growing demand. During 2006, global primary aluminum consumption grew approximately 7%, Hydro reports, influenced by a strong rise in Chinese consumption. Primary aluminum consumption in the western world increased by an estimated 4.5% in 2006. Chinese consumption increased approximately] 8% in 2006, compared to 2005, accounting for approximately 25% of global primary aluminum consumption.

The forecast for growth in aluminum demand for 2007 is 7%, according to Rusal. This growth will be supported by increasing demand from automotive and construction industries in the United States, Europe, and Asia. Alcoa predicts mat annual global consumption of aluminum products, both upstream and downstream, will double over the next 15 years.

Aluminum prices fluctuated but were generally higher than in 2005, according to the USGS. In January, the average monthly U.S. market price for primary ingot quoted by Platts Metals Week was $1,118 per pound. It reached a high of $ 1.355 per pound in May and was $ 1.170 per pound in September. Prices on the London Metal Exchange followed the U.S. market price trends, with the monthly average LME cash price for September at $1,121 per pound.

What follows is a look at the 2006 operations of selected primary aluminum production companies throughout the world, based on information gathered from company web sites and annual reports. Since these reports were issued. Rusal and Sual Group have combined to become the United Company Rusal, but operated as separate companies in 2006. and Rio Tinto is currently in the process of acquiring Alcan.