Insight

Current prices insufficient to trigger aluminium CAPEX

Loading current market price

Get this report

Loading current market price

Get this report as part of a subscription

Enquire about Subscriptions

Already have subscription? Sign In

Further information

Pay by Invoice or Credit Card FAQs

Contact us

For further information about this report submit the form below.

Report summary

Wood Mackenzie routinely reassesses the long run alumina and aluminium incentive prices which are the minimum prices needed to make investment in new capacity economically viable. In formulating our view of long run alumina and aluminium prices we move away from supply demand inventory style analysis and use a financial based model using discounted cash flow and internal rate of return (IRR) to determine the equilibrium incentive price. In line with conventional economic theory we assume that in the long run the alumina and aluminium markets are in equilibrium.

What's included

This report contains

  • Document

    Current prices insufficient to trigger aluminium CAPEX

    PDF 333.35 KB

Table of contents

  • Some refinery costs have become embedded but overall costs declined
  • Assumptions used to construct incentive prices
  • We employ the following core assumptions:

Tables and charts

This report includes 7 images and tables including:

Images

  • Alumina prices will have to increase in the future to trigger investment in alumina refinery
  • Some of the increase in refinery energy costs over the years became embedded
  • Current prices insufficient to trigger aluminium CAPEX: Image 5
  • China still carries the lowest capital intensity
  • Aluminium prices need to increase to trigger investment but to levels below historical averages
  • Efficiency and productivity gains meant little embedded costs in aluminium production

Tables

  • Smelter capital intensity outside of China, 1980-2020 (US$/t installed capacity)

You may be interested in

    
            
            
            
            
    

Questions about this report?

  • Europe:
    +44 131 243 4699
  • Americas:
    +1 713 470 1900
  • Asia Pacific:
    +61 2 8224 8898