Despite the current low prices, demand will improve as China, the US and Europe increase imports
The Middle East aluminium sector is going through a period of unprecedented expansion. The GCC states tripled smelter capacity in the 10 years to 2011 and several projects are under way that will see the region emerge with 10 per cent of global supply later this decade.
The GCC produced about 3.6 million tonnes of primary aluminium in 2010, but consumed just 600,000 tonnes. In a drive to diversify industry and provide local jobs, governments in the GCC are striving to develop downstream markets for aluminium, but rapid smelter expansions will boost the region’s reliance on export markets.
The current downwards pricing trend will be of concern for companies such as Saudi Arabian Mining Company (Maadan) and Emirates Aluminium (Emal), which are pushing through major smelter projects.
Aluminium prices have failed to recover to pre-crisis levels and have slipped over the past two months on concerns about the Chinese and European economies.
But despite the prevailing price weakness, experts at the CRU World Aluminum conference in Abu Dhabi on 1 May painted a positive picture for Middle Eastern metal.
Based on CRU supply and demand projections, the US and the EU are set to significantly expand their position as net importers of primary aluminium by 2020. At the same time China, the world’s biggest producer and consumer, is on track to be net importer of more than 1 million tonnes a year.
Global demand is expected to increase by 6 per cent a year to 2020. These market dynamics should play into the hands of the GCC as it develops into a major world aluminium hub. The Middle East, along with Russia, is set to cement its role as key supplier to world.