| NEW YORK, April 10
NEW YORK, April 10 Alcoa Inc. said on
Tuesday it lowered by 1 percentage point its outlook for China's
aluminum consumption growth in 2012, but kept its forecast for
global demand growth at 7 percent.
In 2011, global primary aluminum use grew by 10 percent.
Alcoa now expects China's aluminum demand will grow by 11
percent in 2012, down from the 12 percent pace it projected in
early January, Chairman and Chief Executive Klaus Kleinfeld told
analysts on the company's first-quarter conference call.
It also trimmed its projected 2012 outlook for Asian
aluminum use minus China to 8 percent from 9 percent previously.
Consumption increased by 15 percent in China and by 10
percent in Asia excluding China during 2011.
The aluminum giant left its outlook for India's demand
growth at 10 percent, matching last year's growth rate.
"We also remain confident about the consumption increase
patterns that we're seeing in North America, Brazil, India and
Russia. So, that's all good," said Kleinfeld.
Alcoa continues to project a primary aluminum deficit for
2012, but cut that as well to 435,000 tonnes from a
600,000-tonne deficit estimated in early January.
It lowered the deficit it sees for China in 2012 to 350,000
tonnes and now looks for a small 85,000-tonne shortfall for the
rest of the world, where the company had previously predicted a
250,000-tonne surplus for this year.
For alumina, the key ingredient used to produce the shiny
metal, Alcoa now expects a surplus of 1 million tonnes, whereas
it had previously looked for supply to match demand in 2012.
Last week, Alcoa announced that it planned to cut its own
alumina production in the Atlantic region by 4 percent, becoming
the first refiner to take measures aimed at reducing oversupply
that has lowered prices to around $300 a tonne.
Turning to China, the CEO pointed out that about 80 percent
of its alumina refineries sit in the higher end of the global
cost curve and that it imports about 60 percent of the raw
material bauxite needed to make alumina and ultimately aluminum.
He added that over 90 percent of China's aluminum smelters
and alumina refineries are coal powered, well above the industry
norm, which, when combined with a falling metal price and rising
input costs, suggest that about a third of China's smelting
capacity is cash negative.
"If you add this all up you can see that this is not a very
healthy and not a very competitive industry structure," the
executive said, setting up for his reasons why China's plans to
rapidly expand its aluminum industry into its western regions
would unlikely improve its structural imbalances in the long
He argued that the massive $45 billion investment needed to
set up smelting operations in the West and the environmental
impact of using coal and scarce water resources would be too
costly for the roughly 100,000 new jobs it would create.
Still, Kleinfeld said, Alcoa expects healthy sales and
production increases for China in all of the main aluminum
consuming market segments during 2012.
The company raised its 2012 global sales growth projections
in only two of the six main aluminum market segments from the
forecasts announced in January.
It left its outlook for beverage cans steady at 2 to 3
percent sales growth and barely lowered production growth
targets for the automotive and heavy truck and trailer segments.
It lifted 2012 global aerospace sales growth outlook to 13
to 14 percent from the previously projected gains of 10 to 11
percent in early January, but cut commercial building growth
outlook by 1.5 percentage points to 2.5 to 3.5 percent.
Though it whittled down its forecasts for China's 2012 sales
and production growth in all segments except beverage cans,
which it left at a hefty 15 to 20 percent pace, Kleinfeld said,
"A little softer but still good, good growth (in China)."
Pittsburgh-based Alcoa surprised Wall Street with a
first-quarter profit after a fourth quarter of 2011 loss.
Results beat analysts' forecasts for a 4 cent per share loss.