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7 Pages

Alumina and aluminium prices must rise to prevent crunch


Alumina and aluminium prices must rise to prevent crunch

Report summary

Wood Mackenzie routinely reassesses the long run incentive price, which is the minimum price needed to make investment in new capacity viable based on a rate of return of 15%. The assessment takes into account changes in operating and capital costs, and the extent to which these have become embedded. We now estimate that the incentive price for alumina is US$370/t, while that of aluminium is $2380/t.

What's included?

This report includes 2 file(s)

  • Alumina and aluminium prices must rise to prevent crunch PDF - 353.29 KB 7 Pages, 2 Tables, 6 Figures
  • Insight Equilibrium Prices Charts for WMAS upload.xls XLS - 287.50 KB

Description

This Metals Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.

For industry participants and advisors who want to look at the trends, risks and issues surrounding this topic, this report gives you an expert point of view to help inform your decision making.

Our analysts are based in the markets they analyse and work with high-quality proprietary data to provide consistent and reliable insight.

We provide unique in-depth analysis of the metals supply industry so you can make confident strategic decisions.

  • Executive summary
  • Operating costs outpace prices
  • Capex continues to rise for both smelters and refineries
    • Long run equilibrium prices and price forecasts suggest crunch potential
  • Rationale, risks and IRR methodology
  • Assumptions used to construct incentive prices

In this report there are 8 tables or charts, including:

  • Executive summary
  • Operating costs outpace prices
    • Raw material, electricity, energy and alumina prices, 2000-2013, 2000=100
    • Raw material, electricity and aluminium prices, 2000-2013, 2000=100
    • Percentage of LME linked power tariffs in total costed supply
    • Weighted average refinery and smelter margins as percentage of price, 1984-2013
  • Capex continues to rise for both smelters and refineries
    • Refinery capital intensity outside of China, 1980-2019 (US$/t installed capacity)
    • Smelter capital intensity outside of China, 1980-2019 (US$/t installed capacity)
    • Historical and equilibrium alumina prices (2014 US$/t alumina)
    • Historical and equilibrium aluminium prices (2014 US$/t aluminium)
  • Rationale, risks and IRR methodology
  • Assumptions used to construct incentive prices
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