Monthly Archives: November 2012
Jorge Vazquez, from Harbour Aluminum, gave the most stirring paper of all the papers at Arabal - certainly of the ones I saw. But the part that got the most attention was at the start of his speech.
Jorge presented some data on inventory, open interest and price spreads, and drew the conclusion that the LME is being manipulated. The big boys, fresh from the GFC of 2008/2009, moved onto commodities, and chose aluminum to short.
To be fair to Jorge, when he was questioned at the end of his speech, he said simply, “I present the data, you draw your own conclusions.” But the queue of people waiting to talk to Jorge afterwards was a sign that he hit a nerve among many in the audience. Jorge is an enamoured speaker, and despite having something like 60 slides, kept the audience in his hands for his entire allotted time.
Other stories, gossip and mis-information from the corridors of Arabal 2012.
* It’s said that there is a shipment of calcined coke currently stranded at a port in Venezuela, after the buyer failed to pay the balance. It’s unclear why an international trade was done on open terms basis first up. Last time I heard, the demurrage had reached 18 days.
* A smelter in the Middle East is struggling with iron levels. According to the corridor gossip, a consulting company suggested to this smelter that they could improve costs by extending anode life by one day. (That’s the story, incredible as it seems.) What they got was an increase in iron, and line of customers waiting to receive metal deliveries.
* Simonsens have now completed their move to the bottom of the pot. They are now worldwide agents (with one exception) for Ningxia Qingxin, China’s largest producer of graphitised blocks. According to Morten Simonsen, the blocks are now being successfully trialled in many locations, although the sales effort does not extend to the famous/infamous profile blocks (sometimes called Chocolate Blocks).
The Aluminerie Alouette (AA) sustainable development report of 2011 became available in October. In the report, AA states its world class production technology has a carbon consumption of 12,744Kwh/t. With an annual capacity of 600,000 tonnes, it is the largest aluminium smelter in North America.
As with any smelter, optimizing use of electricity to create cost savings and improve efficiency is paramount. Most of the power used at AA is generated by hydroelectricity. Between 1995 and 2000, AA reduced energy consumption by 7%, while boosting production by 12%. AA uses approximately 13,000Kwh of power (DC) per kilogram of aluminium, this puts the company in the industry’s “best performing” list.
However, AA is not the only company striving for technological excellence, other companies, particularly companies in China are making waves. Hunan Shengtong Group announced in May 2012, the company achieved major developments in aluminium electrolysis technology after just 3 years of research. The successful project reduces electricity consumption down to 11,992 Kwh per tonne of aluminium produced. This is a 1,222Kwh/t saving compared to other electrolyzers. If everyone were to reduce electricity consumption at similar rates, the industry could slash 19.68bn Kwh/yr; this translates to 6.87Mt of coal saving and a reduction of 17.9Mt of greenhouse gas emissions annually.
The ‘made-in-China’ norm is changing. Chinese companies are improving their performance and abilities and are contributing to overall industrial improvements around the globe. As a result, AA will need to have even higher benchmarks; however, that is precisely the right move – constant improvements in processes and systems through benchmarking and technological advances.
(Source: Alouette Company Website & Shengtong Group website)
Our first AZ China podcast is available now. This ten minute update takes a look at the current market situation, why smelters not making a profit continue to operate, and where the China market is headed for the remainder of the year.
This information is excerpted from our Q4 Red Book which analyzes the previous quarter’s data. If you’d like more details, contact enquiries@az-china.com.
Immediately following the ARABAL conference in Qatar this week, AZ China will be speaking at the CBI Petroleum Coke Market conference in Xiamen next Tuesday, November 27. We will then be taking part in the Antaike Aluminium conference in Chongqing from Nov 28-Dec 1. To schedule meetings, please contact enquiries@az-china.com. Look forward to seeing some of you there.
We have been offering a free report since September called the AZ China Aluminium Weekly Alert® which is a weekly monitor on the primary aluminium market in China. If you are not already signed up as a free subscriber, do so today! All current free subscribers will be eligible for a discounted subscription in the future.
The Weekly Alert provides fundamental, technical, data and news analysis, and covers a range of market metrics such as:
- the SHFE market (price and inventory)
- the economy
- end demand
- production numbers
- cash costs
- equity market performance
The Weekly Alert is a useful market tracker for traders, a powerful detailed report for analysts, and a valuable inside look into the market for anyone with an interest in the aluminium industry. It also is the perfect complement to our quarterly Red Book.
This report is still currently available as a complementary service. During this period, we are open to your suggestions about how to customize the report to best meet your needs. To subscribe to this free weekly report, simply email enquiries@az-china.com.
The AZ China Q4 Red Book has just been released and provides a comprehensive view of the primary aluminium market in China. To get your copy or enquire about subscription rates, email enquiries@az-china.com
Are you going to ARABAL 2012?
I am a speaker panellist, due up on stage the Thursday morning. If you would like to meet with me, please send me an email at paul.adkins@az-china.com. I am arriving Monday morning, so plenty of time for a meeting. I am also taking part in the Qatalum smelter visit on the Tuesday afternoon.
China’s National Bureau of Statistics (NBS) has released the production statistics for October. According to the NBS, October saw 1.72 million tonnes, for a daily production rate of 55,480t.
This is a substantial 20% increase on a YoY basis, though the rate itself is down slightly from recent highs. The current record, based on NBS data, was August with 56,450t per day.
The daily production rate has been in this band for the most of the last 6 months, but we expect to see a slight uptick before the end of the year. New capacity in China’s northwest is still to have an impact on the numbers, although there’s no guarantee that fresh production will make it into the official data. China’s data collection and reporting leaves a lot to be desired.
Year to date, China has produced 16.3 million tonnes, according to the NBS. That puts China on course to nudge 20 million tonnes for the year in the official statistics, and at least 21 million according to our figures. We count smelters such as Wei Qiao, which gets left out of the official figures.
The China aluminium market had a brief flurry this morning when the Strategic Reserves Board’s (SRB) first tender documents were released into the market.
The tender calls for placement of 160,000t, with delivery between the end of November and the end of January 2013. There was also an order for zinc metal.
It’s a relatively small order, compared to the size of the aluminium market. China produces almost 60,000t per day. We estimate total inventory in the system, including consignment, finance metal, Shanghai metal and plant stocks, to be around 1.5mt. So this order is not likely to cause the market’s direction to change. That became clear to traders fairly quickly. The metal price jumped initially, but failed to find any more air under the wings.
There is some talk of the SRB going back into the market, to take its purchase quantity up to 400,000t. But even that isn’t much, as we discussed in the blog last week. It is a little surprising that the SRB didn’t order the whole lot in one tranche. Perhaps they are still looking for storage space. We understand the SRB has already made purchases of other commodities, including up to 1 million tonnes of cotton.
Reuters story on this morning’s move included a hope from one market commentator that this was a sign of a new round of stimulus measures. I find that unlikely. All of China’s leadership is currently tied up in the 18th Communist Party Congress. More likely, the SRB had to complete a mountain of paperwork following previously-given approvals. Or perhaps they were waiting on a price signal from the market. The price was inching towards the crucial RMB15000 mark until this morning.
If Beijing was going to announce a new round of stimulus measures, would they really start with aluminium and zinc? Why not start with more infrastructure programs, tax cuts for individuals, or lowering of interest rates?
Bad news for my old friends at the former Alcan/Pechiney, now known as Rio Tinto Alcan.
RTA has been proudly announcing the impending start-up of their 600KA line in French Canada. Slated for first metal in February 2013, RTA’s people were looking forward to claiming the title of being the first company to operate an aluminium reduction cell at 600,000 amps. Any time a senior exec from RTA gets up at a conference, the 600KA smelter and the February start date is up there at the top of their pronouncements about their company’s achievements.
Bad the bad news is that the Chinese have beaten them. Chalco has had 12 pots running since August. The line is part of their new phase 2 in Liancheng, Gansu province. Admittedly we don’t have any information as to whether the dial has been cranked all the way up to the 600 mark, but then it’s highly likely the RTA plant will start at a lower speed than that as well.
These pots are enormous. According the the SAMI specification, the pot shell will be 23.4 metres long * 5.2 metres wide. Anodes will be 1750×740×620 mm, and there will be a whopping 56 anodes in a single pot. There will be 28 cathodes along the bottom of the pot. This is a monster of a pot.
We are closely watching what is happening with the Liancheng smelter, and the other 600KA projects under construction in China, and will bring more news when we have it.
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