ME aluminium producers fill gap after US plants closed

dubai — Middle East aluminum producers are boosting metal shipments to the US to fill a supply gap left from plant closings.

Electricity costs give Middle East producers the advantage, Jorge Vazquez, managing director of Austin, Texas-based Harbor Intelligence, said in an interview in Dubai.

Since 1980, US output has dropped from 4.6 million metric tonnes by 32 smelters to about 700,000 tonnes by five smelters this year, he said. The last US smelter to open was in 1985, he said.

“Demand in the US is growing but at the same time production is declining, and declining in a significant way,” Vazquez said.

“It’s opening an interesting opportunity for vendors outside the US.”

Middle East shipments of value-added aluminium parts to the US in the first nine months of tthis year rose 50 per cent to about 734,000 metric tonnes, or 60 per cent of the total, Vazquez said. The cash cost of production in the Middle East was $1,200 a tonne in the third quarter, compared with $1,670 a tonne in the US, he said.

The Middle East aluminium industry started from one smelter in Bahrain in 1971 producing 120,000 metric tonnes a year to today’s six smelters in Saudi Arabia, UAE, Oman, Bahrain and Qatar with output of about 5.2 million tonnes last year, according to Emirates Global Aluminium.

Alcoa split into two companies as of November 1 after shutting unprofitable smelters and cutting production.

North American demand is now about 7.5 million tonnes a year, against US output of 750,000 tonnes and Canadian production of three million tonnes, Tim Murray, chief executive officer of Aluminium Bahrain, told an aluminium conference in Dubai.

“Production has to come from somewhere, and I believe it’s going to continue to come from the Middle East.” — Bloomberg