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Alumina incentive price rises on regional shift

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23 March 2016

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.

Table of contents

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

Tables and charts

This report includes 8 images and tables including:

  • 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
  • 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)
  • 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
  • Alumina incentive price rises on regional shift: Table 2

What's included

This report contains:

  • Document

    Alumina incentive price rises on regional shift

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