Alcan sees alumina market in balance in 2-3 years

Alcan Inc. AL.TOAL.N, the world’s second-largest maker of primary aluminium, sees the global alumina market coming back into balance within two to three years as refiners shut down capacity.

“The alumina market is expected to remain in surplus for the next two to three years then could revert into balance,” Alcan’s chief executive of bauxite and alumina, Jacynthe Cote, said on Wednesday.

She said alumina refineries were already closing and more shutdowns were expected in 2007.

“By 2009 we think that 8-9 million tonnes of alumina capacity will be idled or permanently closed for which 1-1.5 million tonnes will be in China, but the bulk clearly in North America and Europe, where refineries have to import bauxite,” Cote said at a business lunch.

World demand for alumina, derived from bauxite and used to make aluminium, is expected to grow at a compound annual rate of 5.5 percent between 2005 and 2010, with China making up more than half the additional demand.

By 2009-10, 18.8 million tonnes of addtional alumina production will be needed to support prmary aluminium production, Cote said.

She said while China would become a major producer, it would face high production costs due to poor quality bauxite supplies.

“Against that backdrop, given the forecasted current industry cost structure, we foresee the self-regulating alumina prices in the $250-$300 per tonne range, recognising that short term/spot prices could temporarily go lower,” she said.