Higher raw materials costs, lower aluminum prices posing serious challenge to global aluminum industry, Norsk Hydro's CFO says; global growth in 2012, outside of China, forecast at 3%-5%

Alison Gallant

LOS ANGELES , February 20, 2012 (Industry Intelligence) – Higher raw materials costs and lower prices for aluminum and aluminum-based products are posing a serious challenge to the aluminum industry, Platts reported Feb. 17, citing a Feb. 16 interview with Norsk Hydro's CFO Jorgen Rostrup.

For its own part, Norsk Hydro has made it known that it will curtail production at its Kurri Kurri primary aluminum smelter in Australia, reducing output 60,000 tonnes from total yearly capacity of 180,000 tonnes. Rostrup told Platts that the Kurri Kurri plant struggles the most of all the company's plants and the Oslo, Norway-based company took a US$170 million write-down on that smelter in the fourth quarter. Rostrup also said the company may further curtail production at the site.

Rostrup refrained from predicting the volume of production cutbacks the industry would implement, but pointed out that 1 million tonnes had been curtailed so far.

Looking forward to the rest of 2012, Rostrup said that emerging economies and China look promising, as does the U.S. Rostrup was less optimistic about Europe, particularly southern Europe.

Overall, Rostrup expects global demand growth, outside of China, to be about 3%-5% in 2012.

The primary source of this article is Platts, New York, New York, Feb. 17, 2012.

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