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7 Pages

Alumina incentive price rises on regional shift


Alumina incentive price rises on regional shift

Report summary

We now estimate that the incentive price at which investors would be willing to build new alumina capacity is US$400/t, US$40/t higher than our previous estimate, while the equivalent price for aluminium remains at US$ 2300/t.

What's included?

This report includes 1 file(s)

  • Alumina incentive price rises on regional shift PDF - 309.26 KB 7 Pages, 2 Tables, 6 Figures

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
  • Southeast Asia: new entrant to future alumina supply growth
  • Operating costs are stickier than prices
    • Smelter capital intensity outside of China, 1980-2015 (US$/t installed capacity)
  • Ample future refinery capacity and temporary tightness in smelter supply
  • Rationale, risks and IRR methodology
    • Assumptions used to construct incentive prices
    • We employ the following core assumptions:

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

  • Executive summary
  • Southeast Asia: new entrant to future alumina supply growth
    • New refinery capacity in Indonesia, India and Guinea to increase the incentive price
    • China, India and to a lesser extent, Indonesia, will contribute a large portion of new smelter capacity
  • Operating costs are stickier than prices
    • Alumina costs - caustic soda, and bauxite outpace the alumina price, 2000-2016, Index 2000=100
    • Aluminium costs - embedded costs have eaten into smelters' margins over the past 16 years
    • Refinery capital intensity outside of China, 1980-2015 (US$/t installed capacity)
    • Alumina incentive price rises on regional shift: Table 2
  • Ample future refinery capacity and temporary tightness in smelter supply
    • Refinery incentive price 20% above the alumina average of the past ten years
    • Aluminium price is well below the level needed to stimulate new smelter capacity
  • Rationale, risks and IRR methodology
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