(MENAFN- Gulf Times) Aluminium demand is growing 6% a year with the automobile market taking up more than half of output at Qatar Aluminium (Qatalum), the joint venture of Qatar Petroleum and Norsk Hydro.
Automobile customers account for 60% of Qatalum's products, chairman Abdulrahman Ahmed al-Shaibi said yesterday at a conference in Doha. The drop in oil prices has not affected demand as the company is operating its factory at capacity, he said.
Aluminium prices have climbed 4.2% in the past year, outperforming copper, gold and Brent crude, as Ford Motor Co introduced aluminium-bodied F-150 pickups compared with a mostly steel predecessor.
Qatalum will wait to expand until stockpiles decline more, chief executive officer Tom Petter Johansen said in an interview. "There is still a lot of aluminium in stock globally," Johansen said. "The stock should go down before we push more metal into the market."
Aluminium for delivery in three months dropped 0.4% to $1,793.50 a metric tonne on the London Metal Exchange yesterday.
Inventories of the metal in warehouses monitored by the LME stand at 3.9mn tonnes, double the combined total held in copper, lead, nickel, tin and zinc.
Qatalum built its plant in Qatar with plans to double production to 1mn tonnes a year. Output was 612,000 tonnes last year and another plant won't be built for at least two years, Johansen said.
Automobile companies are targeting aluminium to reduce emissions and improve fuel efficiency, Citigroup said in a report dated March 3. "The most promising sector is the automotive sector," Johansen said. Lower oil prices may reduce the fuel-efficiency driver behind auto aluminium demand, David Wilson, an analyst at Citigroup, said in the report. Brent crude has dropped 45% in the past year.
At the same time, manufacturers are trying to develop alloys that contain more recycled metal, Wilson said. "At a 75% recycled metal content rate, current aluminium auto body usage projections would add only 800kt to primary aluminium demand by 2020, not a volume to drive market deficits," he said. Page 20
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