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London, Mar 25: Traders and analysts attending Metal Bulletin's alumina and bauxite seminar here said alumina prices are likely to remain within current ranges of around $150 a tonne.
Lloyd O'Carroll, chief economist and equity research analyst with Scott and Stringfellow, said western world alumina demand should grow at a 3.4 per cent rate from 1997-2003 while western world alumina capacity will grow at 3.2 per cent for the same time period.
"If the market requires substantial greenfield capacity, long-term pricing can average close to $200 a tonne but if the market can be supplied by brownfield only, long-term pricing will average closer to the $155-182 a tonne range," he said.
He also projected that alumina prices would average $175-190 a tonne in the long-term, including greenfield and brownfield projects.
"Alumina demand will grow at a faster pace over the next six years versus the previous nine years," said O'Carroll.
Traders attending the conference agreed that prices would likely remain flatfor the short to medium term as long as the fundamental picture did not see any significant changes or surprises. Because alumina pricing is tied into the LME aluminum price on contracts, the depressed state of the aluminum market has brought the alumina prices down with it.
"Metal prices weakened significantly throughout 1998 and alumina spot prices followed, weakening by $5-10 a month over the second half of the year," said Mark Fraser, senior analyst with CRU.
"By the end of last year, average spot prices had fallen to approximately $160 a tonne," he added.
Fraser said western refiners are expected to produce just over 37 million tonnes of alumina in 1999 while western demand should grow by just over one million tonne.
"Next year we expect alumina demand to grow to 1.1 million tonnes. Western alumina supply will have to grow by around 8,00,000 tonnes in 200 if alumina stocks are to be maintained at a level equivalent to 60 days of metal production," said Fraser.
"There are no significantmovements expected in the aluminum price in 1999, therefore alumina prices are unlikely to move much," he added, forecasting an average spot alumina price of around $150-155 a tonne for 1999.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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