FT:
The aluminium industry is facing a huge supply glut that could trigger thousands of jobs losses as the coronavirus pandemic forces key customers to halt production.
Demand for the lightweight metal, used in everything from cars to drinks cans, will drop 8 per cent this year, reflecting severe lockdowns in the world’s biggest economies, according to consultancy CRU.
Carmakers including Peugeot, Volkswagen and Ford have already cut production at plants in Europe and North America because of quarantine measures and falling demand for new vehicles.
As a result aluminium production could outstrip global consumption by 6m tonnes this year or 4m tonnes if major producers, which include Alcoa and Rio Tinto, move quickly to close smelters.
To put that figure in perspective, the surplus following the global financial crisis a decade ago reached 3.9m tonnes, which the industry took years to digest
“There is going to be a substantial global surplus,” said Eoin Dinsmore, analyst at CRU. “It is going to be impossible to avoid that.”
CRU reckons smelters producing 900,000 tonnes of aluminium annually will be closed in China this year and just over 1m tonnes in the rest of the world. “We expect curtailments from the majors and they will be centred in Europe and Australia,” added Mr Dinsmore.
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Aluminium prices have been under pressure since spiking above $2,500 two years ago after the US slapped crippling sanctions on Rusal, the largest producer outside of China.
The metal’s price has ground steadily lower because of weak demand, this week hitting a four-year low below $1,600 a tonne.