Incentive prices: alumina to aluminium price ratio to rise? Report

Insight 08 February 2013

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Report summary

Wood Mackenzie's analysis of long run incentive prices for alumina and aluminium suggests that prices will need to be higher in the future than historically observed, if the market is to remain in equilibrium.

IRR methodology- the rationale and risks
Prices have not kept pace with operating costs
Capital intensity for both refineries and smelters have risen
Incentive pricing - assumptions employed
Model output - long run equilibrium alumina and prices

Tables and charts

This report includes 8 images and tables including:

Raw material, electricity, energy and alumina prices
Raw material, electricity and aluminium prices
Alumina prices and refinery cash costs, 2000-2012 (US$/t aluminium)

Aluminium prices and smelter cash costs, 2000-2012 (US$/t alumina)
Refinery capital intensity outside of China, 1980-2016 (US$/t installed capacity)
Smelter capital intensity outside of China, 1980-2016 (US$/t installed capacity)
Historical and equilibrium alumina prices (2012 US$/t alumina)
Historical and equilibrium aluminium prices (2012 US$/t aluminium)