November 22, 2017

Aluminium industry cautiously optimistic on growth prospects

Players in South Africa’s aluminium industry are cautiously optimistic about business prospects in 2016 and beyond, notwithstanding generally sluggish economic conditions internationally, foreseeing production doubling.

This emerged at the recent International Aluminium Conference, organised by the Aluminium Federation of South Africa (AFSA) in Cape Town, South Africa.

The agenda of the conference centered on issues impacting on the development of the local aluminium industry, including new insights for successfully navigating concerns which are causing heightened uncertainty and volatility in the sector.

Several speakers from different stakeholder bodies expressed confidence in the aluminium industry, but also called for government to create conditions favourable to its growth.

Mark Krieg, the AFSA President, said he believed what would cushion South Africa is the complete value chain, low per capita income and a sophisticated, modern and well-established manufacturing sector from effects of an economic slowdown.

On the other hand, the industry acknowledges hindrances that the industry faces, according to comments experts made.

Henk Langenhoven, chief economist at the Steel and Engineering Industries Federation of SA (SEIFSA), called for policy certainty, protection against instability of electricity supply.  “Secondary producers are concerned about cost increases and import competition, which are crucial inputs to other sectors of the economy,” he noted.

The local industry is not insulated from conditions in the global economy, which are currently gloomy. Eoin Dinsmore, principal consultant at CRU Analysis, highlighted this point in his presentation on supply and demand dynamics at the conference.  “Global aluminium demand growth is slowing on weaker Chinese growth. Smelter closures are expected in China, USA and Europe. Premiums are under pressure from forward spreads but the deficit outside China is rising. Prices will remain under pressure from lower Chinese growth and high inventories,” he said.

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