INTL AL CONF: Key discussion points from this year’s virtual International Aluminium Conference

Here are the key takeaways from Fastmarkets’ International Aluminium Conference that took place on Monday September 21-Wednesday September 23.

Low-carbon aluminium
Low-carbon aluminium is a huge talking point in the market right now and the conference dedicated a day to sustainability.
Sustainability directors from Rio Tinto, Norsk Hydro, UC Rusal and Alcoa participated in a panel discussion discussing the growing demand from downstream consumers for transparency throughout the aluminium production supply chain.
They said that creating transparency and credibility in the green aluminium sector will be a key factor in expanding the market for sustainably produced metal.
Ali Al Baqali, chief executive of Aluminium Bahrain, also warned delegates about the need for being “rational” while the market begins to embrace low-carbon aluminium.
And En+ Group executive chairman Lord Gregory Barker said creating a definition for low-carbon aluminium would be an important step in helping to develop broader market engagement in sustainable production.
New low-carbon initiatives
The focus on low-carbon aluminium led to the announcement of a number of new sustainable initiatives at the conference. Alcoa chief executive officer Roy Harvey announced exclusively at the conference that Alcoa is launching the first ever low-carbon alumina brand, EcoSource.
Harvey explained that EcoSource is produced with no more than 0.6 tonnes of CO2 equivalent (CO2e) per tonne of alumina.
Meanwhile, China Hongqiao announced that it will complete phase one of its hydro-powered aluminium smelter in southwestern China’s Yunnan province by the end of the first quarter of next year.
LME’s sustainability drive
The London Metal Exchange was also in focus; its sustainability discussion paper consultation ended just after the conference on September 24.
The exchange’s new package of sustainability proposals should aid the discovery process of low-carbon aluminium pricing, CEO Matthew Chamberlain said.
While Lord Barker of En+ Group called on the LME to eventually make its new spot trading platform mandatory to drive a new asset class for low-carbon aluminium and to improve transparent, sustainability-based trading.
“But I think it’s going to be a challenge to come up with something that’s really credible if we end up with something that is just voluntary, that isn’t as rigorous in terms of transparency. I think you could have a lot of disappointed punters out there,” Barker said.
Covid-19 issues
The Covid-19 pandemic bolstered aluminium demand from the packaging sector, while the automotive and construction sectors are now recovering after taking the biggest hits during the pandemic’s peak, CEOs of major aluminium producers said during a panel discussion at the conference.
Alcoa’s Harvey said he now sees a “snap back” from the difficult second quarter, where in the United States, the temporary shutdown of the automotive supply chain had crippled demand. But his optimism was tinged with caution given the uncertainty of this pandemic.
Major aluminium producers operating in some of the countries most affected by Covid-19 took decisive actions early on to protect workers and maintain operations, top executives also assured delegates.
When Norsk Hydro CEO Hilde Merete Aasheim learned of the pandemic in China, she quickly took down the company's extrusion plants in the country. But she soon realized the coronavirus was not contained in China and swiftly engineered health and safety guidelines for its other locations.
Alf Barrios, CEO of Rio Tinto Aluminium, explained that the now-ended US tariff on Canadian aluminium and the effect of Covid-19 on the market as a whole made an already challenging 2020 for the aluminium industry even tougher.
Raw materials
There was also lots of discussion around aluminium raw materials at the conference. Noranda chief Thomas Robb told delegates that global alumina prices are expected to remain rangebound over the next quarter unless there are significant changes to the supply and demand picture.
John Thuestad, executive vice president of bauxite and alumina at Norsk Hydro added that alumina prices had not been significantly affected by the recent reduced capacity at the Alunorte refinery because of the current oversupply in the alumina market.
Further upstream, factors including an improving oil price and increased demand will support a recovery in the cif China bauxite price in the second half of this year, Fastmarkets aluminium analyst Yang Cao told the conference. But he told market participants to keep a close eye on the effect of a weakening domestic China alumina price on the bauxite market.

Alice Mason

alice.mason@fastmarkets.com

Published

Alice Mason

September 28, 2020

16:39 GMT

London