Aluminium output in West Asia to grow, says Fitch

Aluminium production in West Asia will outpace growth in other regions over the next five years as producers abandon higher-cost locations in the US and western Europe, a report by Fitch Ratings said.

Existing primary aluminium production in the region is about 2 million tonnes and will probably double by 2011, Fitch said in an e-mailed report today. Rising energy costs in the US and western Europe have forced some smelters to close or relocate. Power can account for up to 30 per cent of the cost of making aluminium.

"The world is experiencing a shrinkage in the number of 'power islands' able to support energy intensive industries such as aluminium production," said Peter Archbold, director of the industrials team at Fitch, in the report.

Energy costs an average of $20 per megawatt-hour in West Asia compared with $28 in the US and $40 in China for the same measure, the report said.

Aluminium production in West Asia is dominated by Dubai Aluminium and Aluminium Bahrain, which together account for about 85 per cent of the existing production.

About 3.2 million tonnes of primary aluminium production, equivalent to about 8 per cent of current world capacity, is expected to be taken offline in the US, Europe and China by 2011, Fitch said.