Aluminum Producers in China ‘Losing Money,’ May Reduce Output

May 21 (Bloomberg) -- Aluminum producers in China are operating at less than the cost of production after domestic prices fell and the government raised power rates for smelters, said Liu Xu, an analyst at China International Futures Co.

All “producers in China are definitely weighing output cuts now,” Liu said today. “It’s based on how far prices have fallen, without even taking into account that the cost for some producers will increase after the new power rules.”

China, the world’s largest maker of the metal, said last week it will raise power surcharges for some aluminum companies by as much as 100 percent from June, to curb overcapacity. Aluminum in Shanghai has fallen 13 percent this year and London Metal Exchange prices have dropped 11 percent on concern that Europe’s debt crisis may derail the global economic recovery.

Producers in China are probably unprofitable, with an average production cost of 15,300 yuan a ton, said Wan Ling, a Beijing-based analyst at CRU International Ltd. That compares with today’s price on the Shanghai Futures Exchange of 15,105 yuan ($2,212), taking this month’s fall to 6.8 percent.

“At these prices all aluminum producers in China are losing money,” said Jia Zheng, a trader at Soochow Futures Co. “So far we haven’t heard of any output cuts yet. Producers will try to maintain output for a long as they can because it is costly and time-consuming to restart idled capacity.”

The metal used in cars and airplanes gained 0.4 percent in London to $2,000 a metric ton at 2:26 p.m. in Singapore.

China’s measures to raise power charges may affect 6 percent, or 1 million tons of smelting capacity in China, according to estimates by Aluminum Corp. of China, or Chalco, the country’s largest producer.

Stockpiles Surge

China is cutting overcapacity as stockpiles of the metal in warehouses monitored by the Shanghai Futures Exchange have jumped 61 percent this year after smelters ramped up output on expectations demand will improve as the global economy recovers.

Higher production costs and weak aluminum prices may force smaller smelters to cut production in the second half, Eric Zhang, an analyst at Shanghai Metals Market, a unit of CBI China Co., said in a report last week.

“Zinc and lead producers will be next,” said Jiang Donglin, research department manager at Shenzhen Zhongjin Lingnan Nonfemet Co., the country’s third-largest zinc maker.

“The bigger ones that have their own mines are still in the black,” Jiang said. “Some of the smaller ones, which have to import concentrate, have already started to operate at a loss and it’s only a matter of time before they cut output.”

--Editors: Richard Dobson, Jake Lloyd-Smith
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
http://www.businessweek.com/news/2010-05-21/aluminum-producers-in-china-losing-money-may-reduce-output.html

India: Aluminum fall on higher stocks

AHMEDABAD (Commodity Online): Aluminum May contract has moved down by 0.60% during trading session in MCX due to Dollar strength and higher stocks.

Aluminum opened at Rs 92.85 per Kg and made low of 90.85 while it made high of 93.6. Total volume is around 3588 lots and open interest is around 2280. Today LME stocks is +39075

“Technically, resistance level is at 95” said Hardik Shah, Sr. Commodity Analyst with Commodity Online.

14 days RSI for Aluminum is at 35 and is decreasing continuously on selling pressure.

“Fundamentally, Aluminum is weak. One can make short position at 97 levels for long term.” said Shah.

To get in touch with the Analyst on this report, please mail to tips@commodityonline.com
http://www.commodityonline.com/marketmovers/India-Aluminum-fall-on-higher-stocks-2010-05-20-1125-3-1.html

Vale stays in aluminum with Norsk Hydro deal

Reuters reported that Brazilian miner Vale's purchase of 22% stake in Norsk Hydro will give Vale long term access to aluminum markets even after it exits the aluminum industry as an operator.

Mr Ricardo Carvalho director of Vale Aluminum said that the company would sell its aluminum assets to Norwegian aluminum maker Norsk Hydro in a surprise USD 4.9 billion deal that lets Vale keep exposure to the aluminum value chain from bauxite to aluminum products.

He said that this is a strategic repositioning in which Vale stops being an operator and becomes a major partner of a global aluminum company and makes that company much more competitive in the future.

Mr Carvalho denied the company was reducing aluminum exposure to boost iron ore investments, saying the deal was structured such that the principal compensation to Vale came in the form of Norsk Hydro shares rather than cash. In addition to shares, Vale will receive USD 1.1 billion of cash for assets including the world's largest alumina refinery and one of the world's biggest bauxite mines. The Norwegian company will assume USD 700 million of debt. He said that the deal was unrelated to that dam auction and had been negotiated long before it.

Analyst of HSBC said that we see the sale of aluminum and bauxite assets as strategically positive for Vale. The aluminum division has always had weak performance and the capital freed up can be applied to develop more lucrative assets in iron ore.

Analysts for UBS Investment Research said that this transaction provides with the flexibility to exit the assets in future through a liquid instrument, but also provides a strategic stake in Hydro should Vale turn more constructive on aluminum longer term.
http://www.steelguru.com/news/index/MTQ0NjE0/Vale_stays_in_aluminum_with_Norsk_Hydro_deal.html

Couplings with aluminum hubs have low inertia

Couplings with aluminum hubs have low weight and low inertia making them an excellent choice for servo motor and other precision motion control applications.

Zero-Max CD couplings with aluminum hubs have low weight and low inertia making them an excellent choice for servo motor and other precision motion control applications.

Available in single and double disc pack models, these couplings have high torsional stiffness and zero-backlash.
These aluminum hub CD couplings provide the same torque as the steel hub versions along with a 15 to 20% increase in the couplings rev/min rating for most models.
Both single and double disc pack models combine the best features found in steel disc and elastomeric couplings through the use of a patented open arm disc design made of rugged composite material.
This unique design provides the high misalignment capacity found in many elastomeric couplings but with higher torsional stiffness.
Cmpared to steel disc couplings, CD couplings with aluminum hubs offer superior damping and isolation of shock and vibrating loads, including elimination of fretting corrosion and dramatic reduction of stress fractures at the bolt hole locations.
The CD coupling also provides excellent chemical and moisture resistance in hostile environments that prove difficult or impossible for elastomeric or steel disc couplings.
The aluminum hub CD Single Flex models are available in either clamp style or keyway with set screw style hubs from 1.85in to 6.00in diameters.
They handle speeds from 5,200 to 17,000 rev/min and have torsional stiffness of 1,800 to 41,485 in.lb/deg depending on size.
The aluminum hub CD Double Flex models are available in either clamp style or keyway with set screw style hubs from 1.85in to 6.00in diameters.
They handle speeds from 4,400 to 17,000 rev/min and have torsional stiffness of 850 to 20,196 in.lb/deg depending on size.
CD couplings are also available with custom designed disc packs for virtually any type or style of application.
http://www.manufacturingtalk.com/news/zer/zer107.html

EPA to clean up abandoned aluminum smelter in Vestal

The U.S. Environmental Protection Agency will clean up an abandoned aluminum smelter in Vestal under the federal Superfund program.
Smokey Mountain Smelters on Maryville Pike is one of eight polluted properties nationwide to be nominated for the National Priorities List, the EPA announced Tuesday. The Tennessee Department of Environment and Conservation referred the site to the EPA for inclusion on the list.
According to the EPA, the two-part cleanup will scrub the site of contaminants that are leaching into groundwater and a nearby creek from the aluminum recycling performed from 1979 to 1994 by the now-defunct Rotary Furnace Inc.
"Cleaning up this site is a good thing for the community and Knox County," TDEC spokeswoman Tisha Calabrese-Benton said. "The potential of turning it back to productive use is a positive step."
The first part of the cleanup would remove about 2,700 cubic yards of aluminum dross, a waste product, and demolish the dilapidated main processing building at a cost of up to $3 million, all in federal funds.
In an internal memo, TDEC's remediation director, Andy Binford, outlined the potential danger of inaction: "As this building continues to collapse, if a large amount of water were to contact the unreacted portion of aluminum dross, such as during a severe weather event, a fire and release of ammonia gas could result."
An estimated 2,545 people, including residents of the Montgomery Village housing project, live within a four-mile radius of the site.
The second part of the cleanup would occur after the 27-acre site is added to the National Priority List and would address 75,000 cubic yards of salt cake left over from agricultural chemical production from 1922 to 1979.
According to TDEC, a feasibility study would determine the scope and cost of the work. EPA would pay 90 percent of the second phase, with the state paying the remainder.
The Tennessee Clean Water Network, an environmental advocacy group, has studied the site and pressed state officials to clean it up for years. Renee Hoyos, the group's executive director, said Tuesday's announcement augurs well for an eventual cleanup.
"That's excellent," she said. "That site was leaching the periodic table of elements into that creek."
According to the EPA, the contamination from the aluminum recycling includes aluminum nitride, sodium and potassium chlorides, PCBs and heavy metals like arsenic. The agency reported that arsenic in excess of federal drinking water standards is in the groundwater.
http://www.knoxnews.com/news/2010/mar/03/epa-to-clean-up-vestal-site/

Couplings with aluminum hubs have low inertia

Couplings with aluminum hubs have low weight and low inertia making them an excellent choice for servo motor and other precision motion control applications.

Zero-Max CD couplings with aluminum hubs have low weight and low inertia making them an excellent choice for servo motor and other precision motion control applications.

Available in single and double disc pack models, these couplings have high torsional stiffness and zero-backlash.
These aluminum hub CD couplings provide the same torque as the steel hub versions along with a 15 to 20% increase in the couplings rev/min rating for most models.
Both single and double disc pack models combine the best features found in steel disc and elastomeric couplings through the use of a patented open arm disc design made of rugged composite material.
This unique design provides the high misalignment capacity found in many elastomeric couplings but with higher torsional stiffness.
Compared to steel disc couplings, CD couplings with aluminum hubs offer superior damping and isolation of shock and vibrating loads, including elimination of fretting corrosion and dramatic reduction of stress fractures at the bolt hole locations.
The CD coupling also provides excellent chemical and moisture resistance in hostile environments that prove difficult or impossible for elastomeric or steel disc couplings.
The aluminum hub CD Single Flex models are available in either clamp style or keyway with set screw style hubs from 1.85in to 6.00in diameters.
They handle speeds from 5,200 to 17,000 rev/min and have torsional stiffness of 1,800 to 41,485 in.lb/deg depending on size.
The aluminum hub CD Double Flex models are available in either clamp style or keyway with set screw style hubs from 1.85in to 6.00in diameters.
They handle speeds from 4,400 to 17,000 rev/min and have torsional stiffness of 850 to 20,196 in.lb/deg depending on size.
CD couplings are also available with custom designed disc packs for virtually any type or style of application.
http://www.manufacturingtalk.com/news/zer/zer107.html