Thanks to the United States government’s sanctions upon the world’s second-biggest aluminium producer and mandated production cuts at his own company’s operations, the head of Norsk Hydro says that the global aluminium market may soon find itself mired in significant supply shortage.
Hydro’s President and CEO Svein Richard Brandtzæg said as much in an interview with Reuters on Monday, continuing by warning that several industries who rely upon a steady stream of aluminium, including automakers and beverage can producers, among many others, have begun to be concerned about consistent deliveries and affordable prices for their metal of choice.
“If this lasts long, it’s possible it will also lead to production cuts at our Norwegian smelters, which also receive alumina from Alunorte,” he warned, referencing the situation at the world’s largest smelter in northern Brazil.
“This is not positive for the aluminum industry. We’ve got long-term customers seeking stable relations, and our car-making customers are particularly worried in this situation, both by the prices but also by the cost of delivery premiums.”
With the price of aluminium reaching six-year highs yesterday on the LME as a backdrop, Brandtzæg said that the situation was ripe for an even more dire situation to come.
“There is a shortage of alumina, and there will also be a shortage of aluminum unless Rusal can find new markets quite quickly,” he warned.
Although a possible new outlet for Rusal’s production currently wanting an outlet may be Asia. However, Brandtzæg says such a solution may simply present more problems.
“The metal would remain part of the global balance and we’d have to expect more exports from Asia into our European markets, particularly since China faces restrictions on exports to the U.S.,” he opined.
Rio Tinto’s declaration of force majeure late last week also helped spike aluminium prices yesterday, along with production cuts at Hydro’s joint venture Albras Alumínio Brasileiro S.A. (Albras), dropping output at South America’s largest aluminium smelter from 460 thousand metric tons per annum of capacity to 230 thousand metric tons per annum.