aluminium and raw materials weekly market tracker · 2012-08-14 · metal bulletin research 09...

Aluminium and Raw Materials Weekly Market TrackerWeekly Feature: Alumina Analysis

Issue 266 09 January 2011www.metalbulletinresearch.com

ContentsMarket Analysis 3Primary Aluminium

Technical Analysis 5Aluminium Alloy

Technical Analysis 6Demand Analysis 7Supply Analysis 9Recycled Aluminium

and Scrap 11Alumina Analysis 12Demand Indicators 14

Features ScheduleAlumina January 9Electricity January 16

Carbon Products January 23

Funds Flow January 30

Metal Bulletin Research LME price indicatorAvg. 3-month price for trading period 09 Jan - 13 Jan versusLME avg. 3-month price for trading period 02 Jan - 06 Jan of $2,020/tonne

l The down trend in aluminium prices may be put on hold for a while as the market adjusts to news of production cutbacks. The cutbacks to date are not that large, so further weakness is likely, especially if exchange stocks continue to climb. Alloy prices have rebounded, but they look over extended. We expect the down trend to dominate. l The SHFE/LME deferential continued to attract imports of aluminium to China in the first week of 2012. Last week the SHFE/LME spread stayed around the $500/tonne mark on average although down from $546/tonne spread seen in the second half of December, levels last seen in May 2009. l In order to improve the company’s competitiveness and lower the production costs, Alcoa, the largest US producer of aluminium, said it is intending to curtail its global smelting capacity by 12%, or 531,000 tonnes within the H1 of 2012. Rio Tinto Alcan has also halved production at Shawinigan smelter to 50,000 tpy, and announced the permanent closure of the plant by Dec 2014. Just days after the Shawinigan incident, the company announced it is also reducing utilisation rates at its 438,000 tpy Alma smelter. l At the beginning of the month Chinese aluminium major Chalco has dropped its alumina price to $443/tonne from $474/tonne and Chinese free market alumina prices are sitting between $408-443/tonne. This has been put down to better domestic supply from increased imports and smelter destocking in the short term.

3-Month LME Price and Moving Averages, Prices picked up in the first week of the New Year

following a string of positive economic data from the US

Source: LME, MBR

Spot SHFE Price and Moving Averages, SHFE prices nudged up on the back of restocking ahead of

the Chinese New Year holiday

Source: SHFE, MBR

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Analysts: Yang Cao, Andy Cole and Kamil WlazlyEditor: Kamil Wlazly Tel: +44 (20) 7827 6443, [email protected] Research Manager: Jason Kaplan Tel: +44 (20) 7827 6487, [email protected] subscriptions: Tel: +44 (20) 7779 7999, [email protected] by Metal Bulletin Ltd, Nestor House, Playhouse Yard, London EC4V 5EV, United Kingdom © Copyright 2010

US manufacturing continues to defy eurozone woes

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Metal Bulletin Research

09 January Aluminium and Raw Materials Weekly Market Tracker 2

IAI Unwrought LMEAfr NAm LAm Asia Eur Aus Total Asia Eur NAm LME Total Comex (5) SHFE (2) Japan Port (3) Total Stocks Change (4)

Nov 09 58 225 104 220 430 88 1,125 1,064 1,514 1,974 4,552 - 270 181 6,176 -20Dec 09 66 248 114 242 446 89 1,205 1,065 1,535 1,996 4,596 - 298 193 6,320 144

Jan 10 64 260 128 242 476 96 1,266 1,094 1,507 2,023 4,624 - 334 194 6,405 85Feb 10 62 263 98 237 467 100 1,227 1,097 1,448 2,063 4,608 - 371 201 6,368 -37Mar 10 70 246 102 231 432 94 1,175 1,138 1,348 2,108 4,594 - 407 193 6,369 0Apr 10 64 247 102 252 448 96 1,209 1,150 1,243 2,153 4,546 - 434 191 6,363 -6

May 10 125 249 103 271 457 98 1,303 1,152 1,235 2,145 4,532 - 495 205 6,559 196Jun 10 66 241 99 266 431 86 1,189 1,156 1,187 2,079 4,422 - 497 202 6,309 -249Jul 10 77 259 116 283 451 83 1,269 1,155 1,142 2,085 4,381 - 492 210 6,353 43

Aug 10 95 246 101 280 526 77 1,325 1,165 1,135 2,135 4,435 - 491 238 6,496 144Sep 10 116 258 109 279 448 79 1,289 1,159 1,117 2,076 4,352 - 489 233 6,363 -134Oct 10 84 264 98 278 539 71 1,334 1,165 1,095 2,043 4,303 - 490 228 6,355 -7

Nov 10 121 219 109 262 461 80 1,252 1,128 1,106 2,054 4,288 - 462 225 6,228 -128Dec 10 110 227 105 319 559 76 1,396 1,097 1,085 2,094 4,277 - 441 224 6,336 108

Jan 11 110 273 143 316 571 94 1,507 1,100 1,270 2,151 4,521 - 426 221 6,680 344Feb 11 117 299 141 311 583 78 1,529 1,111 1,299 2,201 4,611 - 424 208 6,768 88Mar 11 106 355 150 301 559 79 1,550 1,123 1,305 2,165 4,592 - 411 201 6,754 -13Apr 11 110 376 135 320 509 87 1,537 1,133 1,309 2,170 4,611 - 383 219 6,750 -4

May 11 109 367 147 336 532 82 1,573 1,184 1,291 2,223 4,699 - 333 225 6,823 73Jun 11 80 339 140 329 500 84 1,472 1,145 1,274 2,172 4,590 - 255 225 6,440 -383Jul 11 101 346 149 334 547 88 1,565 1,037 1,335 2,081 4,453 - 182 226 6,419 -21

Aug 11 125 283 139 342 514 83 1,486 971 1,641 2,021 4,632 - 125 240 6,483 65Sep 11 103 274 128 337 492 80 1,414 914 1,520 2,016 4,449 - 77 231 6,287 -197Oct 11 80 304 140 346 451 85 1,406 889 1,632 2,027 4,548 - 113 236 6,303 17

Nov 11 84 348 126 375 440 83 1,456 901 1,514 2,025 4,441 - 177 222 6,416 113Q3 09 87 255 111 228 452 76 1,209 1,081 1,541 1,962 4,583 48 230 169 6,241 211Q4 09 66 248 114 242 446 89 1,205 1,092 1,507 2,024 4,622 - 298 193 6,320 79Q1 10 70 246 102 231 432 94 1,175 1,138 1,348 2,108 4,594 - 407 193 6,369 49Q2 10 66 241 99 266 431 86 1,189 1,156 1,187 2,079 4,422 - 497 202 6,309 -59Q3 10 116 258 109 279 448 79 1,289 1,159 1,117 2,076 4,352 - 489 233 6,363 53Q4 10 110 227 105 319 559 76 1,396 1,097 1,085 2,094 4,277 - 441 224 6,336 -27Q1 11 106 355 150 301 559 79 1,550 1,123 1,305 2,165 4,592 - 411 201 6,754 418Q2 11 80 339 140 329 500 84 1,472 1,145 1,274 2,172 4,590 - 255 225 6,440 -314Q3 11 103 274 128 337 492 80 1,414 914 1,520 2,016 4,449 - 77 231 6,287 -1532007 92 402 136 249 565 109 1,553 428 147 354 929 40 383 199 2,810 1162008 67 306 143 284 779 97 1,676 650 643 1,045 2,338 35 207 313 4,568 1,7582009 66 248 114 242 446 89 1,205 1,092 1,507 2,024 4,622 - 142 193 6,320 1,7522010 110 227 105 319 559 76 1,396 1,091 1,507 2,023 4,274 - 168 224 6,336 16

Source: Metal Bulletin Research, IAI, LME, Comex, SHFE, Reuters

Notes: (1) At period-end. (2) Shanghai Futures Exchange. (3) Stocks held at major Japanese ports (Yokohama, Nagoya and Osaka). (4) Change from preceeding period. (5) Comex has halted its aluminium contract and has ceased reporting aluminium stock levels as of the beginning of October, 2009. We will continue to report past stock levels.

Reported Primary Aluminium Stocks ('000 tonnes) (1)

2010 2011 2012Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 f Q2 f Q3 f Q4 f

Regional Analysis ('ooo tonnes)

Western World Production (a) 19,281 20,045 21,461 4,766 4,787 4,829 4,829 4,942 5,061 5,213 5,226 5,355 5,433 5,447 5,642 5,642 5,685 5,685 y-on-y % change -8.1% 4.0% 7.1% -9.4% -9.4% -7.5% -1.4% 3.7% 5.7% 8.0% 8.2% 8.4% 7.3% 4.5% 8.0% 5.3% 4.6% 4.4%Net Exports from FCPE (1) (b) 1,781 3,272 3,037 -114 447 738 754 837 858 823 724 746 797 771 804 781 805 763of which:China -1,464 -2 -97 -886 -361 -91 -36 22 11 1 -70 -9 -9 -9 -20 -15 -15 -20CIS + Eastern Europe 3,246 3,274 3,134 772 808 830 790 815 847 822 793 755 806 780 824 796 820 783Total Western Supply (a+b) 21,050 23,318 24498 4,652 5,234 5,567 5,583 5,779 5,919 6,037 5,950 6,101 6,229 6,218 6,446 6,423 6,490 6,448 y-on-y % change -13.3% 9.9% 5.8% -23.1% -14.4% -8.6% -0.3% 24.2% 13.1% 8.4% 6.6% 5.6% 5.2% 3.0% 8.3% 5.3% 4.2% 3.7%Consumption 18,897 21,996 23,387 4,768 4,624 4,778 5,297 5,569 5,353 5,777 5,632 5,921 5,692 6,142 5,802 6,098 5,864 6,328 y-on-y % change -16.8% 16.4% 6.3% -18.0% -17.3% -16.2% 12.1% 16.8% 15.7% 20.9% 6.3% 6.3% 6.3% 6.3% 3.0% 3.0% 3.0% 3.0%W. World Market Balance 2165 1322 1111 -116 610 789 286 210 567 259 317 180 537 76 644 325 626 119World Analysis ('ooo tonnes)Production 35,169 41,069 44,319 8,977 7,755 8,804 10,067 10,432 10,358 10,212 10,431 11,103 11,380 11,406 11,641 11,691 11,785 11,835 y-on-y % change -8.3% 16.8% 7.9% -10.1% -23.3% -8.2% 4.5% 16.2% 33.6% 16.0% 3.6% 6.4% 9.9% 11.7% 11.6% 5.3% 3.6% 3.8%Consumption 34,348 40,234 43,856 8,343 8,785 9,151 9,543 10,120 9,932 10,638 10,397 11,028 10,833 11,598 11,013 11,684 11,488 12,296 y-on-y % change -8.6% 17.1% 9.0% -13.2% -7.2% -1.2% 18.3% 21.3% 13.1% 16.2% 8.9% 9.0% 9.1% 9.0% 5.9% 5.9% 6.0% 6.0%World Market Balance 821 835 463 634 -1,030 -347 523 312 425 -425 33 74 547 -191 629 8 297 -460Stock Analysis ('ooo tonnes)Total Reported Stocks (2)

6,320 6,336 6087 6030 6241 6320 6,369 6,309 6,363 6,336 6,754 6,440 6,287 - - - - -Weeks' Consumption (3)

9.2 8.2 7.9 9.4 9.3 9.1 8.6 8.1 8.4 7.8 8.4 7.6 7.6 - - - - -Total Stocks (4)

7,684 8,519 8,982 9,061 8,031 7,684 8,207 8,519 8,944 8,519 8,552 8,626 9,173 8,982 9,610 9,618 9,916 9,455Weeks' Consumption (3)

7.3 7.3 7.2 14.1 12.0 11.0 11.1 10.9 11.8 10.5 10.6 10.2 11.1 10.2 11.2 10.7 11.3 10.1Alumina Analysis ('ooo tonnes) (9)

MB Alumina Index (10)241.4 333 374.3 209 262 305 326 335 316 355 391 404 372 331 325 338 338 338

as % of LME 3-m 14.5% 12.3% 15.3% 13.7% 14.3% 15.0% 14.9% 15.7% 15.0% 15.0% 15.5% 15.4% 15.3% 14.9% 15.5% 15.5% 15.5% 15.5%World MGA production 73,840 81,965 88,732 17,806 18,642 19,635 20,164 20,429 20,696 20,678 21,667 22,679 22,368 22,018 22,790 24,353 24,615 24,615World MGA demand 68,734 80,575 86,866 17,540 15,141 17,241 19,732 20,447 20,340 20,055 20,444 21,761 22,305 22,356 22,817 22,915 23,099 23,197World Market Balance 5107 1391 1,867 266 3,502 2,394 431 -18 355 622 1,223 918 63 -338 -27 -36 126 28LME Prices/Forecasts (5)

Cash ($/tonne) 1,664 2,175 2,420 1,488 1,806 2,001 2,165 2,101 2,089 2,344 2,503 2,600 2,398 2,180 2,250 2,300 2,350 2,450Three-month ($/tonne) 1,698 2,201 2,449 1,524 1,837 2,035 2,197 2,130 2,107 2,368 2,527 2,619 2,432 2,220 2,290 2,340 2,390 2,490Source: Metal Bulletin Research, IAI, LME, WBMS

Notes: (1) Former Centrally Planned Economies. Equals net exports of primary aluminium and unwrought aluminium alloy. (2) See table below for breakdown. (3) Based on total world consumption. (4) Includes other reported stocks and MBR's estimate of unreported stock at period-end. (5) Relates to official daily average prices, with the exception of the high and low values which can be set throughout the LME trading day. (6) 2011 contains forecasts for Q4. (7) Basis fob International (8) Chinese free market metallurgical grade, delivered duty paid, Rmb/tonne.(9) Alumina prices are not forecast beyond 2011. (10) Until 2011 we used the spot FOB international alumina price, now we use Metal Bulletin's Alumina Index price.

World Primary Aluminium Supply/Demand Balance, Alumina Analysis, Stocks Analysis and Prices, 2009-2013

2009 2010 2011 f (6)


Market Analysis

l Aluminium prices have found some lift off the December lowsl Production cutbacks may provide some short term support…l …but we expect prices will continue to head lower before too long

Aluminium stocks continue to climbJudging by the renewed build up in LME stocks in December, which saw stocks rise from 4,557,650 tonnes at the end of November to 4,975,600 tonnes on January 6, an increase of 9%, production cutbacks seem quite timely. Over 2011 as a whole, aluminium stocks on the LME climbed 16% from 4,274,975 tonnes. The bulk of the increases in mid-December went into Vlissingen and Detroit. Whether this is metal returning to the LME after financing deals have expired, or metal being lent to the market over year-end, remains to be seen, but the important point to note is just how much extra metal there is around outside the LME warehousing system. Stocks on the Shanghai Futures Exchange have also increased; they climbed 25% in December to 221,624 tonnes.

Premiums remain under pressure as slow European market leads to metal surplusAluminium premiums in the US ended the year under pressure around 7.40-8.10 cents/lb as Canadian origin metal intended for Europe, was diverted to the US. Now with the Christmas and New Year holidays over, it will be interesting to see how the physical market responds. If underlying demand is strong then we would expect premiums to firm up again. China remains the bright spot as far as aluminium premiums are concerned, with premiums rising to $120-130/tonne from $100-$120/tonne for Q1 2012 delivery, but this pick-up is thought to be the result of some restocking ahead of the Chinese New Year holiday insuring against any disruptions to logistics as a result of bad weather over the next few weeks.

The downward trend in aluminium prices took quotes to a low for the year of $1,955/tonne on December 14 and then traded sideways into the year-end. However, last week prices started to rebound, climbing back up to $2,087/tonne on January 4. The announcement of production cuts at the $2,000/tonne level may be sufficient to maintain the current sideways trading pattern – at least for a while. Production cutbacks announced by Alcoa and Rio

Tinto Alcan only amount to one percent of global production, so if other cutbacks are not forthcoming, then we would not be surprised to see prices fall further and with it trigger further production cutbacks. Overall the market remains in a supply surplus, stocks are high and the demand outlook in most regions across the globe is expected to weaken. The US is showing strength at present, but whether that will last remains to be seen.

Market Outlook

SHFE/LME differential, SHFE/LME differential has reached the largest gap since

May 2009 supporting cheaper LME imports

Source: LME, SHFE, Metal Bulletin Research

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Aluminium premiums, Aluminium premiums continue to face downside risk on

the back of uncertain economic backdrop

Source: Metal Bulletin Research

3 Aluminium and Raw Materials Weekly Market Tracker 09 January

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Differential Excl. Duty etc

Approximate differential needed to induce significant imports into China

Metal Bulletin Research Global Aluminium Prices, Premiums & FreightSHFE

LME LME LME LME cash-3 SHFE MB China Henan Shan- Guang- Euro US MW CIS Japan Yen- Euro- Euro US MW Japan Baltic Change

cash 3-m 15-m 27-m c'tngo spot Alumina Avg dong dong d/p sp spot (EU) d/u sp Dollar Dollar spot spot spot Dry on prev.

$/t $/t $/t $/t $/t $/t Index $/t $/t $/t $/t $/t(2) ¢/lb(3) $/t $/t ¥/$ €/$ €/kg ¢/lb ¥/kg Index Period(4)

Dec 09 2,180 2,214 2,318 2,397 34 2,337 - 2,121 2,122 2,190 2,133 92.8 5.7 61.0 118 89.8 0.68 1.56 104.6 206.3 3,517 -12.0%

Jan 10 2,226 2,258 2,356 2,425 31 2,489 - 2,274 2,243 2,256 2,244 101.7 5.9 61.0 123 91.4 0.70 1.63 106.9 214.8 3,123 -11.2%

Feb 10 2,049 2,080 2,181 2,252 31 2,374 - 2,187 2,166 2,242 2,169 110.0 6.2 61.5 128 90.2 0.73 1.58 99.1 196.3 2,671 -14.5%

Mar 10 2,206 2,237 2,336 2,414 31 2,393 - 2,194 2,163 2,216 2,119 123.6 6.3 66.1 128 90.6 0.74 1.72 106.4 211.4 3,306 23.8%

Apr 10 2,317 2,346 2,453 2,533 30 2,383 - 2,201 2,151 2,324 2,158 144.4 6.5 81.1 128 93.5 0.74 1.83 111.5 228.4 3,056 -7.6%

May 10 2,041 2,069 2,174 2,249 28 2,215 - 2,101 2,071 2,151 2,000 168.6 6.7 94.6 128 92.1 0.79 1.74 99.3 199.6 3,865 26.5%

Jun 10 1,926 1,956 2,062 2,138 30 2,116 - 1,978 1,939 2,005 1,936 175.0 6.8 104.5 126 91.0 0.82 1.72 94.1 186.7 3,082 -20.3%

Jul 10 1,977 1,996 2,095 2,169 19 2,181 - 2,013 2,019 2,072 2,005 180.0 6.6 105.0 121 87.6 0.78 1.69 96.3 183.8 1,939 -37.1%

Aug 10 2,122 2,125 2,215 2,281 3 2,243 316 2,083 2,029 2,083 2,029 180.0 6.5 105.0 121 85.6 0.77 1.78 102.7 191.9 2,492 28.5%

Sep 10 2,162 2,194 2,275 2,338 32 2,280 317 2,110 2,081 2,135 2,081 185.0 6.5 105.0 121 84.5 0.77 1.80 104.5 192.9 2,748 10.3%

Oct 10 2,347 2,378 2,418 2,469 32 2,418 342 2,209 2,215 2,174 2,210 190.3 6.6 110.6 117 81.9 0.72 1.83 113.0 201.7 2,625 -4.5%

Nov 10 2,334 2,359 2,418 2,464 25 2,433 358 2,273 2,179 2,233 2,186 197.5 6.5 122.5 117 82.5 0.73 1.85 112.4 202.2 2,202 -16.1%

Dec 10 2,351 2,367 2,424 2,459 16 2,432 365 2,252 2,209 2,305 2,225 197.5 6.4 122.5 116 83.4 0.76 1.93 113.0 205.7 1,962 -10.9%

Jan 11 2,440 2,455 2,516 2,553 16 2,517 378 2,325 2,287 2,311 2,285 197.5 6.4 122.5 113 82.5 0.75 1.98 117.0 210.6 1,366 -30.4%

Feb 11 2,508 2,532 2,598 2,640 24 2,559 392 2,363 2,309 2,374 2,347 197.5 6.4 122.5 113 82.6 0.73 1.98 120.1 216.4 1,192 -12.8%

Mar 11 2,553 2,585 2,666 2,722 33 2,525 402 2,348 2,282 2,351 2,307 192.5 6.6 118.6 113 81.6 0.71 1.96 122.4 217.4 1,506 26.4%

Apr 11 2,663 2,686 2,766 2,822 23 2,549 410 2,365 2,310 2,394 2,313 196.4 7.5 117.5 114 83.3 0.69 1.98 128.2 231.2 1,343 -10.8%

May 11 2,594 2,597 2,672 2,729 3 2,557 409 2,370 2,321 2,265 2,336 200.0 9.0 127.4 114 81.1 0.70 1.95 126.7 219.6 1,392 3.6%

Jun 11 2,555 2,584 2,658 2,713 28 2,632 392 2,414 2,397 2,313 2,404 200.0 8.7 130.0 118 80.5 0.70 1.92 124.6 215.1 1,439 3.4%

Jul 11 2,510 2,541 2,624 2,687 31 2,743 378 2,499 2,519 2,476 2,512 200.0 8.7 130.0 120 79.4 0.70 1.89 122.5 208.9 1,362 -5.3%

Aug 11 2,393 2,426 2,519 2,591 34 2,784 372 2,603 2,543 2,557 2,543 200.0 8.5 130.0 121 77.1 0.70 1.81 117.1 193.8 1,390 2.0%

Sep 11 2,297 2,333 2,420 2,494 36 2,727 364 2,549 2,532 2,632 2,518 200.0 8.5 130.0 121 76.8 0.72 1.81 112.7 185.7 1,842 32.6%

Oct 11 2,172 2,201 2,280 2,360 29 2,612 353 2,452 2,356 2,423 2,423 193.8 8.5 130.0 119 76.6 0.73 1.73 107.0 175.5 2,086 13.2%

Nov 11 2,074 2,094 2,189 2,282 20 2,529 329 - - - - 177.5 8.4 120.0 119 77.5 0.74 1.66 102.5 169.9 1,830 -12.3%

Dec 11 2,022 2,032 2,137 2,242 11 2,527 310 - - - - 161.8 8.1 112.9 119 77.8 0.76 1.66 99.8 166.6 1,808 -1.2%

Q4'09 2,001 2,035 2,141 2,217 34 2,244 - 2,064 2,034 2,041 2,044 86.3 5.5 60 111 89.8 0.68 1.42 96.3 189.9 3,433 23.9%

Q1'10 2,165 2,197 2,296 2,369 31 2,419 - 2,218 2,196 2,191 2,178 111.8 6.1 63 126 90.7 0.72 1.64 104.1 207.5 3,033 -11.6%

Q2'10 2,101 2,130 2,237 2,314 29 2,238 - 2,093 2,015 2,054 2,032 162.7 6.6 93 127 92.2 0.78 1.76 101.6 204.9 3,334 9.9%

Q3'10 2,089 2,107 2,197 2,265 18 2,235 317 2,069 2,019 2,043 2,038 181.7 6.5 105 121 85.9 0.78 1.76 101.2 189.5 2,393 -28.2%

Q4'10 2,344 2,368 2,420 2,464 24 2,428 355 2,245 2,199 2,201 2,207 195.1 6.5 119 117 82.6 0.74 1.87 112.8 203.2 2,263 -5.4%

Q1'11 2,503 2,527 2,597 2,643 24 2,534 391 2,345 2,300 2,293 2,313 195.8 6.4 121 113 82.2 0.73 1.97 119.8 214.8 1,355 -40.1%

Q2'11 2,600 2,619 2,695 2,751 18 2,579 404 2,383 2,341 2,343 2,351 198.8 8.4 125 115 81.6 0.70 1.95 126.5 221.9 1,391 2.7%

Q3'11 2,398 2,432 2,519 2,589 34 2,751 372 2,550 2,521 2,531 2,524 200.0 8.6 130 120 77.8 0.71 1.84 117.4 196.1 1,531 10.1%

Q4'11 2,090 2,110 2,203 2,295 20 2,556 331 - - - - 177.7 8.3 121 119 77.3 0.74 1.68 103.1 170.7 1,908 24.6%

2008 2,576 2,625 2,744 2,812 49 2,421 - 2,302 2,183 2,026 2,019 80 4.4 37 76 103.5 0.68 1.79 121.1 276.0 6,346 -10.2%

2009 1,668 1,702 1,824 1,919 34 2,044 - 1,885 1,841 1,844 1,853 57 4.8 40 77 93.6 0.72 1.23 80.3 162.5 2,616 -58.8%

2010 2,173 2,199 2,285 2,350 26 2,330 - 2,156 2,107 2,122 2,114 163 6.4 95 123 87.8 0.75 1.76 104.9 201.3 2,974 13.7%

2011 2,395 2,420 2,501 2,568 24 2,605 374 - - - - 193 7.9 124 117 79.7 0.72 1.86 116.7 200.9 3,143 5.7%

Source: Metal Bulletin Research, LME, Baltic Exchange

Notes: (1) Term "d/p" represents duty-paid, "d/u" represents duty-unpaid, "MW" is midwest, "EU" is delivered European port. (2) Euro premium is indicator for min. 99.7% western ingot delivered in warehouse Rotterdam. (3) US premium indicator is for P1020 midwest western material. (4) Change from preceeding period (i.e. month-on-month, quarter-on-quarter, etc)

Transaction Prices FreightCurrencySpot Premiums (1)Chinese Transaction PricesLME Prices

Cash to 3 month and cash to 27 month spreads, A large delivery of alumninium to LME

warehouse network forced forward spread to widen

Source: LME, Metal Bulletin Research

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Cash to 3-MonthCash to 15-MonthCash to 27-Month

0%1%2%3%4%5%6%7%8%9%10%11%12%13%14%15%16%17%

4,000

4,100

4,200

4,300

4,400

4,500

4,600

4,700

4,800

4,900

5,000

Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12

(% o

f tot

al S

tock

s)

('000

tonn

es)

Total Stocks [LHS]

Cancelled Warrants [RHS]

Cancelled warrants and stocks, Cancelled

warrants jumped 14.8%to a new record of 744,925

tonnes - further lengthen the queue to remove metal

Source: LME, Metal Bulletin Research




Technical Outlook

Moving averages and Bollinger band: Bearish

Stochastics: Bullish

RSI: Bullish

Prices set a multi-month low at around $1,955/tonne in mid-December, this was followed by sideways trading until January 3, when prices started to pick-up. Having climbed rapidly to $2,078.25/tonne, prices have turned sideways again, albeit in a higher trading range. Prices are now challenging resistance from the upper Bollinger band and the 50 day moving average which lie at $2,086/tonne and $2,079/tonne respectively. With the stochastics

rising steadily and the RSI also climbing there is a good chance that prices will extend their gains. A move above $2,100/tonne would then put the rebound peak in early December at $2,168/tonne in focus. Although the technical indicators support further gains, we feel the overall down trend dominates the chart picture and as such, we would look for another shorting opportunity once the stochastics cross lower again basis a close.

Primary Aluminium Technical Analysis

l Prices start to climb as a New Year rally gets going – still room for further gainsl Prices are now challenging the upper Bollinger bandl Overall expect the down trend to dominate before too long


Technical Outlook

Moving averages and Bollinger band: Neutral to firmer

Stochastics: Just crossed lower

RSI: Neutral

Alloy prices have followed a similar path to that of primary aluminium, prices sank to $1,880/tonne in mid-December and have since rebounded to $2,020.tonne. The rebound in alloy has been enough to turn the Bollinger bands higher, which is now making more room on the upside for prices to climb. That said, so far prices have not moved up through the upper band. However, with the stochastics crossing lower again and the RSI

turning lower, it may be that the rebound has run its course. Given the thinness of trading conditions in alloy, we would not be surprised to see these higher prices attract selling in which case prices could fall back to the $1,900/tonne area quite quickly. Overall we would look for a period of range trading between $1,900 and $2,020/tonne as the market consolidates.

Aluminium Alloy Technical Analysis

l Alloy prices have rebounded in line with primary pricesl Expect the overall down trend to dominatel With the stochastics crossing lower we look for a drop back towards $1,900/tonne



Demand Analysisl US demand for aluminium continues to surprise... l ...with the support coming from aerospace and automotive industryl SHFE/LME differential continues to attract aluminium to China on the back of Chinese New Year restocking

Market Outlook Despite weak aluminium demand growth in some regions during the past six months, it remains well above the 2009 recession levels, thereby challenging the expectations of a severe contraction seen by many market participants. We expect that the uncertainties seen in 2011, namely the possibility of a eurozone financial meltdown and slowdown or hard-landing in Chinese growth, will continue to dominate the outlook for the metal

markets in the months to come. However, we do expect a sequential recovery in the Q2 of 2012 compared to the last quarter of 2011 which judging by the latest round of PMI indicators seemed to have marked the low point in base metals demand of the current downtrend. Although, this outcome is reliant on the emergence of a successful solution to the eurozone debt crisis, and Beijing continuing to adjust monetary policy towards promoting domestic demand.


US manufacturing continues to defy eurozone woesThe recent string of positive macroeconomic indicators from the USA is somehow continuing to defy the repercussions of contracting eurozone industrial growth being felt elsewhere. With higher–than-expected December ISM and Non-Farm Payroll data and even positive growth in housing starts in November, there is no doubt that business and consumer confidence is improving. North American consumption of aluminium registered a 2.6% rise in the first 10 months of 2011 although this relatively low figure is theresult of a 24.2% increase in exports that were supported by a consistently weak dollar against the US’ major trading partners (except China). Taking exports out, total demand (shipments by domestic producers plus imports) saw a rise of 5.9 % with orders from aerospace and automotive industries providing a boost. US premiums have performed better than those in Europe, although not without significant falls in recent months. The US premium, has fallen by 18% compared from the May 2011 high, compared with a 22% decline in Rotterdam premiums. Overall, an improving US economic environment in early 2012 is certainly providing conditions which are supportive to growth in US domestic demand. Having said this, exogenous factors such as the eurozone crisis and the risk of a further slowdown of Chinese growth will continue to pose a threat to medium-term growth prospects in the US. SHFE spreads have tightened as supply reductions bring balance back with falling demandThe SHFE/LME deferential continued to attract imports of aluminium to China in the first week of 2012. Last week the SHFE/LME spread stayed around the $500/tonne mark on average although down from $546/tonne spread seen in the second half of December, levels last seen in May 2009. Furthermore, the premiums for aluminium ingots at LME-registered warehouses in Korea or Singapore are in the $110-130/tonne range. This is marginally below the $120-130/tonne agreed by Chinese aluminium suppliers for delivery in Q1 2012. We expect the arbitrage window to remain open as the Chinese aluminium market has been showing signs of strengthening in the recent weeks which could provide a support to SHFE prices. The nearby SHFE spreads witnessed a sharp tightening with the cash to three-month moving from contango in early December to backwardation exceeding $100/tonne on average last week. This could suggest that the Chinese domestic market is close to balance with the recent reduction in aluminium production exceeding slowdown in demand. We expect December imports to show another increase following the rise in November. However, we remain cautious as to whether Chinese imports will continue to rise in January, as this depends on what happens to LME prices. Adding to this, the onset of the Chinese Lunar New Year could temporarily lead to falling domestic demand.

SHFE 3M-cash spread, SHFE nearby spreads moved into backwardation which suggests that the reduction in spot supply has exceeded the softening in demand

Source: MBR, SHFE

Apparent consumption of aluminium & semis, Apparent consumption growth remained at over 15% y-o-y despite a slowdown in Chinese industrial output

Source: MBR, SHFE, CNIA, China Customs

-600

-400

-200

0

200

400

600

May 10 Sep 10 Jan 11 May 11 Sep 11 Jan 12

(RM

B/to

nne)

-20%

0%

20%

40%

60%

80%

100%

-20%

0%

20%

40%

60%

80%

100%

Oct 09 Mar 10 Aug 10 Jan 11 Jun 11 Nov 11

App demand of semis (YoY)

App consumption of aluminium adjusted for SHFE inventory changes and net imports of scrap (YoY)



Global %

Afr N.Am L.Am Asia W.Eur Aus Total China CIS E.Eur Total Global Ch. y-on-y

Quarterly ('000t)

Q1'08 143 1,496 394 1,756 1,714 96 5,600 3,182 261 218 3,661 9,260 3.4%

Q2'08 150 1,579 401 1,829 1,755 102 5,816 3,298 274 223 3,795 9,612 1.4%

Q3'08 162 1,431 406 1,763 1,735 98 5,594 3,389 263 221 3,873 9,467 2.5%

Q4'08 176 1,407 422 1,938 1,652 105 5,701 3,065 285 210 3,560 9,261 -6.4%

Q1'09 159 1,150 373 1,634 1,315 95 4,727 2,968 200 174 3,342 8,069 -12.9%

Q2'09 167 1,128 379 1,702 1,290 102 4,768 3,195 210 171 3,576 8,343 -13.2%

Q3'09 179 1,083 384 1,641 1,239 97 4,624 3,795 202 164 4,161 8,785 -7.2%

Q4'09 195 1,061 399 1,804 1,214 105 4,778 3,994 218 161 4,373 9,151 -1.2%

Q1'10 158 1,172 388 1,916 1,566 97 5,297 3,808 208 231 4,247 9,543 18.3%

Q2'10 165 1,240 394 1,995 1,671 104 5,569 4,087 218 246 4,551 10,120 21.3%

Q3'10 178 1,167 399 1,924 1,586 99 5,353 4,136 210 234 4,580 9,932 13.1%

Q4'10 194 1,245 415 2,114 1,703 106 5,777 4,383 227 251 4,860 10,638 16.2%

Q1'11 160 1,227 440 2,020 1,689 96 5,632 4,303 222 239 4,765 10,397 8.9%

Q2'11 168 1,297 447 2,104 1,802 103 5,921 4,619 233 255 5,107 11,028 9.0%

Q3'11 181 1,222 452 2,029 1,710 98 5,692 4,674 224 242 5,141 10,833 9.1%

Q4'11 197 1,302 470 2,230 1,837 105 6,142 4,952 243 260 5,455 11,598 9.0%

Q1'12f 169 1,262 466 2,107 1,701 97 5,802 4,734 229 248 5,211 11,013 5.9%

Q2'12f 177 1,334 474 2,194 1,814 104 6,098 5,080 241 264 5,586 11,684 5.9%

Q3'12f 191 1,256 480 2,115 1,722 99 5,864 5,142 231 251 5,624 11,488 6.0%

Q4'12f 208 1,340 499 2,325 1,850 106 6,328 5,448 250 270 5,967 12,296 6.0%

Annual ('000t)

2003 357 6,797 1,062 6,011 6,320 410 20,957 5,202 880 703 6,785 27,742 8.2%

% change 03-04 2.5% 3.0% 6.0% 8.7% 4.7% 10.1% 5.4% 23.5% -4.4% 11.9% 17.8%

2004 366 7,500 1,219 6,646 6,603 437 22,771 6,086 909 706 7,701 30,473 9.8%

% change 03-04 2.6% 10.3% 14.8% 10.6% 4.5% 6.5% 8.7% 17.0% 3.3% 0.5% 13.5%

2005 380 7,567 1,276 6,780 6,717 451 23,171 7,091 964 783 8,839 32,009 5.0%

% change 04-05 3.8% 0.9% 4.6% 2.0% 1.7% 3.4% 1.8% 16.5% 6.1% 10.9% 14.8%

2006 409 7,653 1,395 6,960 7,055 374 23,847 8,580 1,040 879 10,499 34,346 7.3%

% change 05-06 7.8% 1.1% 9.4% 2.7% 5.0% -17.1% 2.9% 21.0% 7.9% 12.2% 18.8%

2007 425 7,526 1,468 7,108 7,244 396 24,167 11,497 1,021 877 13,396 37,563 9.4%

% change 06-07 3.8% -1.7% 5.2% 2.1% 2.7% 5.7% 1.3% 34.0% -1.8% -0.1% 27.6%

2008 632 5,913 1,623 7,286 6,856 400 22,711 12,934 1,082 873 14,889 37,600 0.1%

% change 07-08 2.1% -8.1% 3.7% 0.8% 0.2% 0.0% -2.0% 12.5% 2.0% 2.0% 11.0%

2009 700 4,422 1,536 6,780 5,059 399 18,897 13,951 829 670 15,451 34,348 -8.6%

% change 08-09 10.8% -25.2% -5.4% -6.9% -26.2% -0.2% -16.8% 7.9% -23.4% -23.2% 3.8%

2010 695 4,824 1,597 7,948 6,525 406 21,996 16,414 863 961 18,238 40,234 17.1%

% change 09-10 -0.8% 9.1% 4.0% 17.2% 29.0% 1.7% 16.4% 17.7% 4.0% 43.4% 18.0%

2011 706 5,048 1,809 8,383 7,039 402 23,387 18,548 923 998 20,469 43,856 9.0%

% change 10-11 1.7% 4.6% 13.3% 5.5% 7.9% -1.0% 6.3% 13.0% 7.0% 3.8% 12.2%

2012f 745 5,192 1,920 8,742 7,087 406 24,093 20,403 952 1,033 22,388 46,480 23.9%

% change 11-12 5.5% 2.9% 6.1% 4.3% 0.7% 1.0% 3.0% 10.0% 3.1% 3.5% 9.4%

Global Primary Aluminium Consumption Estimates and Forecasts ('000 tonnes)Western World Non-Western World

Source: Metal Bulletin Research, WBMS

Semi-Fabricated Aluminium Production and Trade ('000 tonnes)2008 2009 2010 Q1 11 Q2 11 Q3 11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11

USA shipmentsSheet and plate 3,714 3,192 3,258 866 923 904 299 310 313 298 313 293 291 - Foil 519 433 449 128 136 126 46 45 45 41 44 41 37 - Extruded products 1,448 969 1,002 335 356 348 115 118 123 110 121 117 116 - Total 5,681 4,594 4,709 1,329 1,415 1,377 460 474 481 448 479 450 444 - German productionRolled products 1,801 1,560 1,659 490 458 477 157 168 134 165 159 152 - - Extruded products 592 455 488 150 157 160 49 58 50 52 52 55 - - Total 2,393 2,015 2,148 639 615 636 205 226 184 217 212 208 - - Japanese productionSheet and plate 1,352 1,063 1,170 295 324 292 104 111 109 107 89 96 99 - Foil 128 98 112 29 32 31 10 10 11 11 10 10 10 - Extruded products 888 673 714 194 186 196 62 58 66 66 63 67 72 - Total 2,367 1,833 1,997 562 561 537 176 179 186 185 162 173 180 - Chinese production and tradeSemis imports 2,155 582 610 134 154 148 55 49 49 54 48 46 42 46 Semis exports 731 1,394 1,634 577 893 811 256 336 301 305 274 232 228 226 Semis production 13943 16,490 17,431 5,275 6,311 6,024 2,012 2,094 2,206 2,011 2,013 1,999 2,076 2,128 Apparent internal semis demand 15,367 15,678 16,406 4,832 5,572 5,361 1,811 1,807 1,954 1,760 1,788 1,813 1,891 1,948 Source: Metal Bulletin Research, Aluminum Association, CNIA, China


Supply Analysis

l Alcoa and Rio Tinto Alcan announce production cutbacksl Cutbacks at $2,000/tonne are ahead of the game compared with 2008…l …but the cutbacks only represent about one percent of global capacity

Market Outlook Although production cutbacks are underway in China, witnessed in the lower production numbers reported in recent months, Western producers are now taking the plunge too. For a considerable time the market has been waiting for cutback announcements, with at least 30% of the industry’s production costs estimated

to be higher than recent prices. What is interesting is these cutbacks have been announced when prices have been trading around the $2,000/tonne level, whereas in 2008-09 cutbacks started to be made when prices fell to the $1,500-1,600/tonne level. This is a clear indication of how production costs have risen sharply in recent years.


Alcoa cuts capacity by 12% due to low pricesIn order to improve the company’s competitiveness and lower the production costs, Alcoa, the largest US producer of aluminium, said it is intending to curtail its global smelting capacity by 12%, or 531,000 tonnes within the H1 of 2012. The company will close its Tennessee smelter permanently, which was curtailed in 2009, along with two of the six idled potlines in Rockdale, Texas, with the combined capacity reduction of 291,000 tonnes, or 6.4% of the company’s worldwide smelting capacity of 4.5mtpy. An additional 240,000 tonnes, or 5.3% will be curtailed in one Italian smelter and two Spain smelters. So far, Alcoa has become another producer (besides Rio Tinto Alcan’s closure of its 175,000 tpy Lynemouth plant) to take direct action to cut costs amid the sharp drop in metal prices. But this time, the cut comes with higher aluminium prices compared with the previous cuts seen in 2009. In 2009, worldwide production dropped 8.3% from the 2008 level, in response to the 35% drop in aluminium prices. But production cuts only started to emerge when prices had dipped to $1,500-1,600/tonne. This demonstrates clearly how production costs have risen in the intervening period. At present we estimate that at $2,200/tonne, 25% of the global aluminium industry is facing losses.

Rio Tinto slashes output at two Quebec smeltersWhile Alcoa’s actions were of a cost cutting nature, Rio Tinto Alcan has also reduced output at two of its Quebec smelters for other reasons. Firstly due to a circuitry failure in the Shawinigan smelter and secondly a union lockout at its Alma plant. Rio Tinto Alcan has halved production at Shawinigan smelter to 50,000 tpy, and announced the permanent closure of the plant by Dec 2014. Just days after the Shawinigan incident, the company announced it is also reducing utilisation rates at its 438,000 tpy Alma smelter. After the Alma smelter failed to reach a new agreement with the union, the company made the decision to lock out 755 union workers which forced the company to close some two-thirds of the smelter’s capacity during the lockout.

The announcements from the two companies could be positive for North American supply/demand fundamentals and provide some support to the regional premium. The cuts should offer support to aluminium prices, although given current stock levels are more than this is unlikely. In the current turmoil market, it seems that the global macroeconomic situation is the leading factor in guiding the price direction, rather than the supply/demand balance. Investors are more concerned about the eurozone crisis and the slowdown in China. Alcoa and Rio Tinto Alcan’s cuts collectively represent just 1.3% of estimated global output of 44 million tonnes last year, which is unlikely to push prices high enough to stop the industry losses, unless more producers follow suit.

Alcoa worldwide capacity, After the capacity cuts in smelters in the US, Italy and Spain, the Alcoa worldwide production capacity will stand at 3.9 mtpy

Source: MBR

World aluminium production, In 2009, worldwide production dropped 8.3% from the 2008 level, in response to the 35% drop in aluminium prices

Source: MBR, IAI, CNIA

0

1,000

2,000

3,000

4,000

5,000

6,000

2008 2009 2010 2011 2012

('000

tpy)

US Spain Norway Italy

Iceland Canada Brazil Australia

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Nov 07 Nov 08 Nov 09 Nov 10 Nov 11

('000

tpy)

China Total (excl. China)


Global Primary Aluminium Production Estimates and Forecasts by Region

Afr N.Am L.Am Asia W.Eur Aus Total Daily China CIS E.Eur Daily Total Total DailyMonthly ('000t)

Nov 09 4.7 12.7 6.7 11.9 10.1 6.1 1569.5 52.32 29.7 12.1 11.2 53 1591.8 3,161 105.4

Dec 09 4.7 12.8 6.7 12.1 10.1 6.2 1634.4 52.72 31.7 12.1 11.2 55 1704.6 3,339 107.7

Jan 10 4.6 12.9 6.3 12.3 10.4 6.2 1633.3 52.69 43.6 12.0 11.2 67 2071.7 3,705 119.5

Feb 10 4.9 12.9 6.3 12.8 10.4 6.1 1498.7 53.53 46.5 12.0 11.2 70 1952.2 3,451 123.2

Mar 10 4.6 13.0 6.3 13.7 10.5 6.2 1683.3 54.30 45.0 12.3 11.5 69 2133.7 3,817 123.1

Apr 10 4.7 13.0 6.3 13.2 10.6 6.2 1621.1 54.04 46.4 12.7 11.7 71 2124.9 3,746 124.9

May 10 4.7 13.0 6.3 13.4 10.8 6.2 1684.8 54.35 45.7 12.7 11.7 70 2174.3 3,859 124.5

Jun 10 4.7 12.9 6.3 13.7 10.6 6.2 1636.1 54.54 47.5 12.7 11.7 72 2157.7 3,794 126.5

Jul 10 4.7 12.5 6.3 14.1 10.9 6.3 1696.5 54.72 43.6 12.5 11.7 68 2102.8 3,799 122.6

Aug 10 4.9 12.5 6.4 14.0 10.9 6.3 1703.5 54.95 44.8 12.4 11.7 69 2136.8 3,840 123.9

Sep 10 4.8 12.7 6.4 14.1 11.1 6.3 1661.3 55.38 43.6 12.5 11.7 68 2035.1 3,696 123.2

Oct 10 4.8 12.9 6.4 14.7 11.1 6.3 1742.4 56.21 41.6 12.6 11.8 66 2045.6 3,788 122.2

Nov 10 4.9 12.9 6.3 15.2 11.3 6.3 1708.2 56.94 39.9 12.7 11.9 64 1932.9 3,641 121.4

Dec 10 4.8 12.9 6.3 15.4 11.3 6.3 1762.4 56.85 40.2 12.7 11.9 65 2009.0 3,771 121.7

Jan 11 4.9 13.1 6.1 15.6 11.7 6.3 1784.9 57.58 41.4 12.3 11.8 66 2031.4 3,816 123.1

Feb 11 4.9 13.1 6.1 16.0 11.8 6.4 1631.3 58.26 46.6 12.3 11.9 71 1979.7 3,611 129.0

Mar 11 4.8 13.4 6.0 16.0 11.9 6.2 1809.9 58.38 45.6 12.4 11.9 70 2168.4 3,978 128.3

Apr 11 4.9 13.6 6.1 16.0 12.0 6.3 1766.0 58.87 48.4 12.3 11.9 73 2177.7 3,944 131.5

May 11 5.0 13.6 6.0 15.8 12.2 6.3 1824.4 58.85 49.7 11.9 11.5 73 2266.5 4,091 132.0

Jun 11 4.9 13.7 6.0 15.7 12.1 6.4 1765.0 58.83 52.1 11.9 11.5 76 2266.9 4,032 134.4

Jul 11 5.0 13.6 6.0 15.8 12.2 6.4 1827.3 58.95 51.3 12.1 11.6 75 2323.7 4,151 133.9

Aug 11 5.0 13.7 6.0 15.9 12.1 6.3 1829.3 59.01 51.6 12.3 11.8 76 2346.1 4,175 134.7

Sep 11 5.0 13.8 6.1 15.9 12.0 6.3 1775.9 59.20 52.7 12.4 12.0 77 2312.0 4,088 136.3

Oct 11 5.0 13.8 6.1 16.2 12.0 6.4 1842.3 59.43 48.1 12.4 11.9 72 2244.2 4,087 131.8

Nov 11 5.0 13.9 5.6 16.1 12.0 6.3 1772.9 59.10 48.9 12.4 12.0 73 2200.8 3,974 132.5

Quarterly ('000t)

Q4 07 456.0 1457.9 655.0 888.7 1211.3 584.0 5,253 57.10 3,418 1,176 125 51 4,719 9,972 108.4

Q1 08 428.0 1464.8 653.0 893.7 1248.4 575.0 5,263 58.48 3,120 1,181 122 48 4,423 9,686 106.6

Q2 08 416.0 1464.0 663.0 930.7 1209.6 575.0 5,258 57.78 3,426 1,178 122 51 4,726 9,984 109.2

Q3 08 432.0 1444.0 676.0 958.2 1196.8 576.0 5,283 57.42 3,501 1,199 124 52 4,824 10,107 109.9

Q4 08 439.0 1410.0 668.0 948.2 1184.8 570.0 5,220 56.74 3,030 1,217 123 48 4,371 9,591 104.3

Q1 09 404.0 1256.0 634.0 1057.0 1007.0 541.0 4,899 54.43 3,501 1,133 101 52 4,734 9,633 106.5

Q2 09 416.0 1179.0 625.0 1094.0 903.0 549.0 4,766 52.96 3,030 1,081 100 46 4,211 8,977 99.2

Q3 09 428.0 1152.0 627.0 1115.0 908.0 557.0 4,787 53.19 1,764 1,104 100 33 2,968 7,755 85.8

Q4 09 433.0 1172.0 622.0 1134.0 904.0 564.0 4,829 53.66 2,759 1,106 110 44 3,975 8,804 97.3

Q1 10 424.0 1164.0 568.0 1208.0 910.0 555.0 4,829 53.66 4,049 1,092 97 58 5,238 10,067 111.2

Q2 10 430.0 1179.0 573.0 1223.6 970.5 566.0 4,942 54.91 4,234 1,156 100 60 5,490 10,432 115.2

Q3 10 442.0 1158.0 583.0 1291.6 1008.6 578.0 5,061 56.24 4,049 1,147 101 58 5,297 10,358 114.4

Q4 10 446.0 1186.0 582.0 1387.5 1033.6 578.0 5,213 57.92 3,735 1,163 102 55 4,999 10,212 112.9

Q1 11 436.0 1189.0 547.0 1427.4 1062.7 564.0 5,226 58.07 4,003 1,108 94 57 5,204 10,431 115.3

Q2 11 449.0 1241.0 548.0 1440.4 1100.9 576.0 5,355 59.50 4,557 1,097 94 63 5,747 11,103 122.7

Q3 11 459.0 1262.0 555.0 1462.4 1113.2 581.0 5,433 60.36 4,728 1,125 94 65 5,947 11,380 125.7

Q4 11f 452.7 1256.9 555.0 1499.7 1107.3 576.0 5,447 60.53 4,736 1,128 95 65 5,959 11,406 126.0

Q1 12f 510.3 1258.2 629.0 1618.5 1060.8 565.1 5,642 62.69 4,701 1,202 97 66 6,000 11,641 128.6

Q2 12f 510.3 1258.2 629.0 1618.5 1060.8 565.1 5,642 62.69 4,751 1,202 97 66 6,050 11,691 129.2

Q3 12f 515.9 1272.0 635.0 1618.5 1071.9 571.3 5,685 63.16 4,801 1,202 98 67 6,101 11,785 130.2

Q4 12f 515.9 1272.0 635.0 1618.5 1071.9 571.3 5,685 63.16 4,851 1,202 98 68 6,151 11,835 130.8

Annual ('000t)

2003 1,428 5,495 2,275 2,327 4,417 2,198 18,140 49.70 5,547 3,934 407 27.1 9,888 28,028 76.8

% change 02-03 4.1% 1.5% 2.1% 9.8% 4.2% 1.3% 3.4% 28.4% 4.4% 7.2% 16.8% 7.7%

2004 1,711 5,109 2,356 2,585 4,667 2,246 18,674 51.02 6,589 4,105 464 30.5 11,158 29,832 81.5

% change 03-04 19.8% -7.0% 3.6% 11.1% 5.7% 2.2% 2.9% 18.8% 4.3% 14.1% 12.8% 6.4%

2005 1,752 5,375 2,391 2,944 4,741 2,252 19,454 53.30 7,743 4,168 475 33.9 12,386 31,841 87.2

% change 04-05 2.4% 5.2% 1.5% 13.9% 1.6% 0.3% 4.2% 17.5% 1.5% 2.4% 11.0% 6.7%

2006 1,864 5,332 2,493 3,296 4,541 2,274 19,799 54.25 9,349 4,276 462 38.6 14,087 33,886 92.8

% change 05-06 6.4% -0.8% 4.3% 12.0% -4.2% 1.0% 1.8% 20.7% 2.6% -2.8% 13.7% 6.4%

2007 1,815 5,642 2,559 3,504 4,664 2,314 20,498 56.16 12,607 4,512 497 48.3 17,616 38,114 104.4

% change 06-07 -2.6% 5.8% 2.6% 6.3% 2.7% 1.8% 3.5% 34.8% 5.5% 7.6% 25.1% 12.5%

2008 1,715 5,783 2,660 3,731 4,840 2,296 21,024 57.60 12,099 4,765 491 47.5 17,356 38,380 104.9

% change 07-08 -5.5% 2.5% 3.9% 6.5% 3.8% -0.8% 2.6% -4.0% 5.6% -1.1% -1.5% 0.7%

2009 1,681 4,759 2,508 4,400 3,722 2,211 19,294 52.86 11,054 4,424 410 43.5 15,888 35,182 96.4

% change 08-09 -2.0% -17.7% -5.7% 17.9% -23.1% -3.7% -8.2% -8.6% -7.1% -16.5% -8.5% -8.3%

2010 1,742 4,687 2,306 5,111 3,923 2,277 20,045 54.92 16,066 4,557 400 57.6 21,023 41,068 112.5

% change 09-10 3.6% -1.5% -8.1% 16.2% 5.4% 3.0% 3.9% 45.3% 3.0% -2.6% 32.3% 16.7%

2011f 1,797 4,949 2,205 5,830 4,384 2,297 21,461 58.80 18,023 4,458 377 62.6 22,858 44,319 121.4

% change 10-11 3.1% 5.6% -4.4% 14.1% 11.8% 0.9% 7.1% 12.2% -2.2% -5.7% 8.7% 7.9%

2012f 2,052 5,060 2,528 6,474 4,266 2,273 22,653 62.06 19,103 4,809 385 66.6 24,296 46,949 128.6

% change 11-12 14.2% 2.3% 14.7% 11.0% -2.7% -1.1% 5.6% 6.0% 7.9% 2.1% 6.3% 5.9%

Western World Non-Western World Global

Notes: Africa: Cameroon, Egypt, Ghana, Mozambique, Nigeria, South Africa; N.America: Canada, USA; L.America: Argentina, Brazil, Suriname, Trinidad & Tobago, Mexico, Venezuela; Asia: Bahrain, India, Indonesia, Iran, Japan, Oman, Qatar, Turkey, UAE (Dubai); W.Eur: Bosnia & Herzegovina, France, Germany, Greece, Iceland, Italy, Montenegro, Netherlands, Norway, Slovenia, Spain, Sweden, Switzerland, UK; Aus: Australia, New Zealand; CIS: Azerbaijan, Russia, Tajikistan, Ukraine; E.Eur: Hungary, Poland, Romania, Slovakia. Individual region daily numbers are in '000 tonne/day, Western World and Non-western World monthly total, quarterly and annual figures are in '000 tonne.

Source: Metal Bulletin Research, IAI, WBMS

kilotonnes/day



Recycled Aluminium and Scrap Analysis

l European secondary aluminium prices remained stable…l …while market sentiment for 2012 differs between Germany and the rest l Chinese aluminium scrap imports reached 23-month high in November

Market Outlook European secondary aluminium prices remained stable during the past month. Not much market activity has been witnessed due to the Christmas and New Year holiday, with only sporadic sales for Q1 delivery reported. DIN226 pressure diecasting ingot stayed at €1,620-1,720/tonne ($2,061-2,188/tonne) with prices at the top of the range reported in Germany and lower prices seen in the South Europe, as usual. Similar to the divergent trend in prices, sentiment for 2012 also seems split between Germany and the rest of Europe. In Germany, the demand from car producers is still robust, and some car makers have already booked some orders for February and March. Elsewhere in Europe, the debt crisis is still causing concerns, and some market participants are maintaining a negative market outlook, saying it will be as late as H2 of 2012 when the market will improve. On the other hand, China’s aluminium scrap imports jumped to a 23-month high in November, reaching 278,000 tonnes, up 23.8% m-o-m and 12.6% y-o-y. One of the possible reasons behind this is that since Q3 2011, scrap recycling companies have been purchasing less aluminium scrap from the domestic market, squeezing China domestic scrap supply. Therefore, in order to meet the year-end restocking requirements, the secondary aluminium producers have had to turn to the international markets for scrap. Meanwhile, the still high SHFE/LME price differential has also maintained the attractiveness of imports.

Secondary, recycled and scrap aluminium prices, production, consumption and trade

Prices of Scrap and Secondary/Recycled Ingots (1)

General European (€/tonne) 2008 2009 2010 Q4 10 Q1 11 Q2 11 Q3 11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11DIN226/A380 Ingot 1,720 1,192 1,877 1,943 2,025 1,889 1,849 1,840 1,863 1,845 1,783 1,731 1,680Floated Frag 1,249 839 1,334 1,356 1,444 1,396 1,356 1,353 1,365 1,351 1,303 1,275 1,292Cast 1,153 750 1,237 1,260 1,336 1,306 1,258 1,257 1,265 1,251 1,203 1,175 1,198Mixed Turnings 6% 1,082 721 1,203 1,213 1,288 1,171 1,126 1,118 1,140 1,121 1,055 1,040 1,047Italy (€/tonne)Pure cuttings 1,321 887 1,384 1,436 1,502 1,461 1,429 1,551 1,380 1,356 1,288 1,330 1,358Old Mixed Scrap 1,104 734 1,218 1,241 1,304 1,262 1,234 1,282 1,230 1,190 1,143 1,200 1,248Commercial cast 1,114 796 1,265 1,284 1,341 1,274 1,234 1,280 1,233 1,188 1,143 1,200 1,253France (€/tonne)Commercial cast 868 482 969 983 1,073 1,025 978 993 1,010 931 911 895 923Pure cuttings 1,533 971 1,417 1,503 1,618 1,613 1,509 1,569 1,465 1,493 1,449 1,386 1,375Germany (€/tonne)Pure cuttings 1,259 726 1,263 1,362 1,417 1,414 1,424 1,465 1,407 1,401 1,340 1,276 1,265Commercial cast 1,144 742 1,269 1,333 1,356 1,342 1,298 1,451 1,229 1,213 1,204 1,165 1,200H9 extrusions 1,632 1,079 1,581 1,640 1,796 1,790 1,663 1,653 1,667 1,669 1,589 1,523 1,540Alloy turnings 910 574 1,039 1,147 1,475 1,038 954 1,010 941 910 866 865 890UK (£/tonne)LM24 Pressure diecasting ingot 1,325 1,017 1,591 1,633 1,685 1,672 1,645 1,643 1,650 1,643 1,618 1,541 1,500Group 1 Litho (baled) 1,214 857 1,244 1,297 1,361 1,405 1,355 1,010 941 910 866 865 890Clean 6063/HE9 extrusions 1,210 818 1,178 1,203 1,337 1,396 1,346 1,380 1,348 1,310 1,205 1,170 1,150Commercial cast 1,214 857 1,050 1,049 1,082 1,077 1,040 1,040 1,040 1,040 980 967 965UBC (100% aluminium) 734 511 770 808 866 895 895 895 895 895 895 895 895USA ($/lb)A-380.1 alloy Ingot 1.14 0.76 1.06 1.10 1.19 1.21 1.19 1.20 1.20 1.17 1.13 1.11 1.08Low-Copper Clips 0.78 0.49 0.73 0.77 0.85 0.86 0.83 0.85 0.84 0.80 0.75 0.74 0.73Old Sheet and Cast 0.72 0.46 0.67 0.71 0.79 0.81 0.78 0.81 0.79 0.75 0.71 0.70 0.70Auto Shred (90% aluminium) 0.78 0.52 0.77 0.82 0.89 0.90 0.86 0.88 0.87 0.84 0.80 0.82 0.83UBC 0.84 0.53 0.74 0.81 0.88 0.95 0.87 0.91 0.87 0.82 0.78 0.75 0.75China ($/tonne)Shredded Tense (91% - 93%) 2,055 1,536 1,968 2,044 2,104 2,103 2,188 2,190 2,209 2,166 2,106 2,089 2,085Shredded tense (Al 93-95%) - - - - 787 2,373 2,462 2,461 2,483 2,441 2,381 2,346 2,331Shredded Taint(90-92%) 1,973 1,505 1,892 1,954 2,012 2,015 2,110 2,112 2,131 2,088 2,028 2,010 2,019High grade alu alloy ADC12 2,628 2,013 2,539 2,652 2,777 2,804 2,899 2,895 2,922 2,880 2,821 2,787 2,765Standard alu alloy ADC12 2,433 1,877 2,382 2,486 2,580 2,573 2,665 2,663 2,687 2,644 2,586 2,570 2,566Aluminium from radiator (85-87%) 1,798 1,427 1,694 1,767 1,832 1,829 1,983 1,978 2,012 1,960 1,864 1,850 1,856Import 6061 alu extrusion 1,940 1,502 1,818 1,882 1,946 1,941 2,085 2,067 2,119 2,070 1,990 2,000 1,987Domestic 6063 extrusion scrap 2,061 1,590 1,915 1,980 2,045 2,041 2,187 2,167 2,221 2,172 2,092 2,100 2,082UBC 1,740 1,335 1,626 1,699 1,753 1,774 1,878 1,899 1,894 1,843 1,752 1,740 1,745LME Prices and StocksSpot Al Alloy Ingot ($/tonne) 1,798 1,427 1,694 1,767 1,832 1,829 1,983 2,319 2,290 2,286 2,166 2,006 1,960Spot NASAAC Ingot ($/tonne) 1,940 1,502 1,818 1,882 1,946 1,941 2,085 2,476 2,404 2,332 2,225 2,123 2,132Al Alloy Stocks(tonnes) (7) 2,061 1,590 1,915 1,980 2,045 2,041 2,187 124,280 130,580 135,920 137,240 140,160 140,240NASAAC Stocks(tonnes) (7) 1,740 1,335 1,626 1,699 1,753 1,774 1,878 153,680 152,320 151,380 154,380 161,880 159,020

Production and trade of secondary aluminium ingots and trade in aluminium scrap (6) ('000 tonnes)China (3)

Net Imports of Scrap 2,153 2,625 2,852 700 559 695 650 224 204 222 224 220 220USA (2)

Secondary Ingot from New Scrap 2,071 1,847 1,546 380 411 409 415 136.0 144.0 135.0 136.0 140.0 140.0Secondary Ingot from Old Scrap 1,323 1,247 1,135 277 333 362 363 121.0 123.0 119.0 118.0 122.0 122.0Secondary Ingot Production 3,394 3,094 2,681 657 744 771 779 257 268 254 254 262 262Ratio of Sec. to Prim. Al. Production 6.29 5.93 5.48 1.37 1.24 1.13 1.14 1.12 1.17 1.13 1.15 1.15 1.15Net Exports of Scrap 1,461 1,203 1,181 257 183 289 516 183 154 179 133 135 135Implied Scrap Generation 4,855 4,297 3,862 914 927 1,060 1,294 440.0 420.9 432.8 386.9 397.2 397.2Europe and CIS (5)

EU 27 Secondary Ingot Production 2,264 1,080 1,449 502 484 478 486 153 151 183 183 181 181German Secondary Ingot Production 721 561 611 146 149 146 133 43 40 50 50 51 51German Net Scrap Exports 167 391 344 97 100 114 98 37 14 47 32 50 50German Net Secondary Ingot Imports 340 312 431 112 119 114 64 35 36French Secondary Ingot Production 196 127 175 48 37 37 37 12 12 12 12 11 11French Net Scrap Exports 146 129 143 23 29 22 55 34 12 8 10 3 3French Net Secondary Ingot Imports 62 65 56 12 3 14 13 6 3 4 6 8 8UK Net Scrap Exports 725 302 328 76 65 88 87 28 30 29 30 25 25UK Net Secondary Ingot Imports -84 -96 -47 -15 -14 -15 -20 -5.8 -6.6 -7.4 -6.8 -7.5 -7.5Rusisan Net Secondary Ingot Exports 299 199 267 81 58 74 90 29.7 32.2 28.2 26.7 31.1 31.1Japan (4)

Production of Secondary Ingot 747 666 817 203 199 155 197 68 59 71 85 102 102Net Imports of Scrap 110 56 76 17 14 13 14 4 5 5 6 5 5Sources: Metal Bulletin Research, USITIC, AMM, MB, CNIA, China Customs, US Geological Survey, Japan Aluminium Association, ALFED, WBMS, GDA, UK Trade Info, ABAL, Metals Info



Chinese alumina imports picked up in NovemberChinese alumina imports grew again in November to reach 227,000 tonnes up 13.5% month-on-month. However, much of the imports in November and December were to fill in the gap left by reduced domestic alumina production (according to official statistics monthly production in November was about 2.6m tonnes, down from 2.9m tonnes in August due to cuts in Shandong province) There has not been a significant, large-scale, sustained, medium term glut in the Chinese market. Instead much of the price movements have been due to movements in the LME prices and mild, short term oversupply situations. At the moment there really is no upwards driver for either Chinese or FOB Australian alumina prices and with the Chinese aluminium smelting industry stagnating under weak aluminium prices and a gloomy local and global economic outlook we expect further price declines in January. This means that the FOB Australia price will likely fall below $300/tonne.

Coal ash alumina project in Northern ChinaChina Shenhua Group, a large Chinese coal and power consortium, is looking into setting up a 6m tpy coal ash consuming alumina refinery in Inner Mongolia. The stated construction cost for the project is $21bn and includes a 6,600Mw power plant and a gallium refinery. Although not stated it is appears that the power plant will feed both electricity and coal ash into the refinery. This move makes sense considering both the abundance of coal in northern China and the country’s poor bauxite stock. Another coal ash refinery was announced in 2006 with a planned capacity of 200,000 tpy for the same province as this project but it is unclear if that project was completed. The coal ash refinery is a proven technology and there is a small test plant in Japan and another in China. The alumina produced by the refinery is intended for the metallurgical market and the process used is apparently more economic than other coal ash refining processes, although we are uncertain if it is more economic than bauxite refining. The conversion ratio is about 3.3 tonnes of coal ash to 1 tonne of alumina. However, it would be interesting to see what economic benefits there are from receiving refining feed stock from the same source as electricity to power the refining process. But, much like Azerbaijan’s alunite refinery and Russia’s nepheline refineries, the development of non-bauxite consuming alumina refinery capacity in China is based on large scale and local supplies of a bauxite replacement: coal. We believe that a small coal ash alumina refinery industry will develop and be limited to northern China. It will not replace bauxite consuming alumina refineries as the country’s predominate source of metallurgical grade alumina.

Alumina Analysis

l FOB Australia prices stablise…l …as Chalco lowers its alumina pricel Small coal ash to alumina refining industry developing in Northern China

Market Outlook MB’s FOB Australia indexed alumina price has been essentially stable after reaching a low of $309.44/tonne at the beginning of January. We suspect much of this has to do with a large portion of the alumina industry being on holiday, but increasing Chinese imports have been supporting prices. Meanwhile, at the beginning of the month Chinese aluminium major Chalco has dropped its alumina price to $443/tonne from $474/tonne and Chinese free market alumina prices are sitting

between $408-443/tonne. This has been put down to better domestic supply from increased imports and smelter destocking in the short term. For the first half of 2012 a recovery in the alumina price will depend heavily on a recovery in the LME aluminium price and increased Chinese aluminium production. We expect alumina production in the country to grow at the same rate as aluminium output although others expect alumina output to grow at a faster pace.

MB Alumina Index, Alumina prices consolidated at $310/tonne following a $100/tonne fall from May 2011 peak

Source: Metal Bulletin Research

14.0%

14.5%

15.0%

15.5%

16.0%

16.5%

17.0%

300

320

340

360

380

400

420

440

Mar 11 May 11 Jul 11 Sep 11 Nov 11 Jan 12

($/to

nne)

MB Alumina Index [LHS]

MB Alumina Index as % of aluminium spot [RHS]



Chinese, Western World and Global Alumina Balances ('000 tonnes)

Implied Implied Net Exp. RequiredMGA MGA Import Actual Stock MGA MGA To Market MGA MGA Market Oper. as % ofProd Cons Req'ment Imports Change Prod Cons FCPE (2) Balance Prod Cons Balance Rate (1) ($/t) LME 3-m

Quarterly ('000t)Q1'07 4,104 5,604 1,500 1,466 -34 11,771 9,763 2,279 -271 17,816 17,719 97 94.6% 356 12.9%Q2'07 4,431 5,933 1,502 1,191 -311 11,983 9,957 2,069 -43 18,384 18,323 61 95.1% 360 13.0%Q3'07 4,765 6,474 1,709 1,293 -416 12,151 10,161 2,233 -243 18,982 19,140 -158 96.7% 347 13.3%Q4'07 5,090 6,699 1,609 1,175 -434 12,211 10,296 2,175 -260 19,841 19,545 297 97.0% 320 13.7%Q1'08 5,125 6,114 989 1,156 167 12,505 10,315 2,341 -151 19,646 18,984 662 91.8% 385 14.2%Q2'08 5,234 6,714 1,480 1,236 -244 12,749 10,306 2,415 28 19,650 19,569 82 92.8% 407 13.5%Q3'08 5,306 6,861 1,555 1,123 -432 12,859 10,355 2,332 173 19,806 19,810 -4 91.0% 384 13.1%Q4'08 4,769 5,939 1,170 1,071 -99 12,663 10,231 2,324 107 19,826 18,798 1,027 86.1% 261 12.5%Q1'09 4,678 6,861 2,183 1,026 -1,157 11,517 9,602 1,970 -55 17,756 18,811 -1,055 82.1% 189 13.6%Q2'09 5,515 5,939 424 1,653 1,229 10,705 9,341 2,493 -1,129 17,806 17,540 266 76.2% 209 13.7%Q3'09 6,147 3,457 -2,690 1,421 4,110 10,495 9,383 2,286 -1,173 18,642 15,141 3,502 65.2% 262 14.3%Q4'09 6,443 5,408 -1,036 1,041 2,076 10,952 9,465 1,974 -487 19,635 17,241 2,394 72.5% 310 15.0%Q1'10 7,134 7,936 802 1,400 598 11,402 9,465 2,122 -185 20,164 19,732 431 79.5% 330 14.9%Q2'10 7,067 8,299 1,232 1,332 100 11,544 9,728 2,124 -309 20,429 20,447 -18 81.4% 350 15.7%Q3'10 6,948 7,936 988 876 -112 12,112 9,964 1,672 477 20,696 20,340 355 80.2% 310 15.0%Q4'10 6,922 7,320 398 498 100 12,239 10,281 1,307 650 20,678 20,055 622 79.2% 290 15.0%Q1'11 8,051 7,845 -206 504 710 11,928 10,243 1,211 474 21,667 20,444 1,223 79.9% 300 15.5%Q2'11 8,838 8,931 93 510 417 12,483 10,496 1,176 810 22,679 21,761 918 83.8% 350 15.4%Q3'11 8,196 9,267 1,071 515 -556 12,483 10,648 1,220 615 22,368 22,305 63 81.5% 360 15.3%Q4'11f 7,696 9,282 1,587 515 -1,071 12,633 10,677 1,177 780 22,018 22,356 -338 81.7% 340 15.0%Q1'12f 7,976 9,213 1,237 1,286 49 12,951 11,058 2,014 -121 22,790 22,817 -27 80.6% 300 15.5%Q2'12f 7,976 9,311 1,335 1,286 -49 13,100 11,058 2,014 28 22,880 22,915 -36 81.0% 350 15.5%Q3'12f 8,158 9,409 1,251 1,300 49 13,244 11,142 2,010 92 23,225 23,099 126 80.8% 360 15.5%Q4'12f 8,158 9,507 1,349 1,300 -49 13,244 11,142 2,010 92 23,225 23,197 28 81.1% 340 15.5%Annual ('000t)2007 18,389 24,709 6,321 5,125 -1,196 48,307 40,177 8,756 -626 75,024 74,727 297 95.9% 352 13.2%% ch. 06-07 47.3% 34.8% 3.7% 3.5% -8.6% 11.2% 12.5%2008 20,435 25,629 5,194 4,586 -608 51,168 41,207 9,411 549 78,928 77,161 1,767 90.4% 352 13.4%% ch. 07-08 11.1% 3.7% 5.9% 2.6% 7.5% 5.2% 3.3%2009 22,783 21,665 -1,118 5,141 6,259 43,689 37,791 8,723 -2,825 73,840 68,734 5,107 73.8% 241 14.2%% ch. 08-09 11.5% -15.5% -14.6% -8.3% -7.3% -6.4% -10.9%2010 28,071 31,489 3,418 4,312 688 47,432 39,438 7,226 768 81,947 80,573 1,374 81.4% 276 12.2%% ch. 09-10 23.2% 45.3% 8.6% 4.4% -17.2% 11.0% 17.2%2011f 32,780 35,325 2,544 2,044 -500 49,495 42,064 4,785 2,646 88,732 86,865 1,867 81.5% 307 13.6%% ch. 10-11 16.8% 12.2% 4.3% 6.7% -33.8% 8.3% 7.8%2012f 32,268 37,442 5,174 5,174 0 52,537 43,467 8,038 1,033 92,120 91,088 1,033 80.1% 321 14.2%% ch. 11-12 -1.6% 6.0% 6.1% 3.3% 68.0% 3.8% 4.9%Source: Metal Bulletin Research, IAI

Ave. (fob)

Notes: (1) The required operating rate is defined as the average utilisation rate required to balance global supply and demand. (2) Eastern Europe, CIS and China. (3) Earliest data is from 2007.

China Western World World Spot Prices

Afr N.Am L.Am Asia W.Eur Aus Total Daily China CIS E.Eur Total Daily Total DailyQuarterly ('000t)Q1'07 102 1,154 3,690 829 1,376 4,620 11,771 130.8 4,104 1,474 65 5,643 61.3 17,414 192.1Q2'07 133 1,175 3,736 875 1,384 4,679 11,983 131.7 4,431 1,489 66 5,986 65.1 17,969 196.7Q3'07 154 1,200 3,746 902 1,415 4,733 12,151 132.1 4,765 1,498 67 6,330 68.8 18,481 200.9Q4'07 180 1,329 3,726 921 1,404 4,651 12,211 132.7 5,090 1,483 67 6,639 72.2 18,851 204.9Q10'8 187 1,416 3,755 967 1,454 4,725 12,505 135.9 5,125 1,370 0 6,495 70.6 19,000 206.5Q2'08 189 1,428 3,889 996 1,454 4,792 12,749 138.6 5,234 1,370 0 6,604 71.8 19,353 210.4Q3'08 192 1,480 3,968 1,025 1,475 4,719 12,859 139.8 5,306 1,385 0 6,691 72.7 19,550 212.5Q4'08 192 1,314 3,971 1,036 1,498 4,651 12,663 137.6 4,769 1,375 0 6,144 66.8 18,806 204.4Q1'09 158 862 3,540 1,181 977 4,800 11,517 125.2 4,678 1,355 49 6,082 66.1 17,599 191.3Q2'09 160 624 2,991 1,194 790 4,948 10,705 116.4 5,515 1,370 50 6,935 75.4 17,640 191.7Q3'09 124 729 2,671 1,207 816 4,948 10,495 114.1 6,147 1,385 50 7,583 82.4 18,078 196.5Q4'09 156 937 2,851 1,207 870 4,932 10,952 119.0 6,443 1,385 50 7,879 85.6 18,831 204.7Q1'10 148 862 2,963 1,222 910 5,296 11,402 123.9 7,134 1,451 158 8,743 95.0 20,145 219.0Q2'10 150 858 2,979 1,233 991 5,333 11,544 125.5 7,067 1,467 160 8,694 94.5 20,238 220.0Q3'10 151 892 3,487 1,294 1,033 5,255 12,112 131.7 6,948 1,483 162 8,593 93.4 20,705 225.1Q4'10 151 887 3,647 1,294 1,033 5,226 12,239 133.0 6,922 1,483 162 8,567 93.1 20,805 226.1Q1'11 138 1,006 3,643 1,301 1,280 4,560 11,928 129.7 8,051 1,491 158 9,700 105.4 21,628 235.1Q2'11 137 1,026 3,670 1,353 1,290 5,006 12,483 135.7 8,838 1,507 160 10,505 114.2 22,988 249.9Q3'11 140 1,036 3,642 1,366 1,310 4,990 12,483 135.7 8,196 1,524 162 9,881 107.4 22,364 243.1Q4'11f 140 1,036 3,717 1,416 1,310 5,016 12,633 137.3 7,696 1,574 162 9,431 102.5 22,064 239.8Q1'12f 137 905 3,839 1,763 1,362 4,945 12,951 140.8 7,976 1,632 186 9,795 106.5 22,745 247.2Q2'12f 137 1,054 3,839 1,763 1,362 4,945 13,100 142.4 7,976 1,632 186 9,795 106.5 22,894 248.9Q3'12f 138 1,066 3,881 1,782 1,377 5,000 13,244 144.0 8,158 1,650 189 9,997 108.7 23,240 252.6Q4'12f 138 1,066 3,881 1,782 1,377 5,000 13,244 144.0 8,158 1,650 189 9,997 108.7 23,240 252.6Annual ('000t)2007 569 6,324 14,898 4,537 5,111 18,987 50,426 138 18,389 5,944 265 24,598 67.4 75,024 206% change 06-07 7.4% -10.0% 1.6% 5.8% -7.3% 3.5% 0.1% 47.3% -1.1% -58.1% 28.6% 8.0%2008 595 7,095 16,135 4,021 5,732 19,416 52,994 145 20,435 5,500 0 25,934 71.1 78,928 216% change 07-08 4.6% 12.2% 8.3% -11.4% 12.2% 2.3% 5.1% 11.1% -7.5% -100.0% 5.4% 5.2%2009 552 3,540 13,161 4,788 3,501 19,820 45,362 124 22,783 5,495 200 28,478 78.0 73,840 202% change 08-09 -7.2% -50.1% -18.4% 19.1% -38.9% 2.1% -14.4% 11.5% -0.1% - 9.8% -6.4%2010 600 4,446 13,609 5,043 4,005 19,647 47,350 130 28,071 5,885 641 34,597 94.8 81,947 225% change 09-10 8.7% 25.6% 3.4% 5.3% 14.4% -0.9% 4.4% 23.2% 7.1% 220.5% 21.5% 11.0%2011 555 4,115 14,627 5,435 5,190 19,294 49,216 135 32,780 6,095 641 39,516 108.3 88,732 243% change 10-11 -7.5% -7.4% 7.5% 7.8% 29.6% -1.8% 3.9% 16.8% 3.6% 0.0% 14.2% 8.3%2012 550 4,091 15,440 7,090 5,477 19,890 52,537 144 32,268 6,565 750 39,583 108.4 92,120 252% change 11-12 -0.9% -0.6% 5.6% 30.5% 5.5% 3.1% 6.7% -1.6% 7.7% 17.0% 0.2% 3.8%Source: Metal Bulletin Research, IAI

Global Metallurgical Grade Alumina (MGA) Production ('000 tonnes)Western World Non-Western World Global

Notes: Africa: Guinea; N.America: USA, Canada; L. America: Brazil, Jamaica, Suriname, US Virgin Isles, Venezuela; Asia: India, Iran, Turkey, Western Europe: Bosnia & Herzegovina, France, Germany, Greece, Italy, Slovenia, Spain, Montenegro; AustralasiaL Australia; CIS: Azerbaijan, Russia, Tajikistan, Ukraine; Eastern Europe Hungary, Poland, Romania, Slovakia.



Selected Demand Indicators2009 2010 Q1 11 Q2 11 Q3 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11

Japan Unit

IPI: Mining and Manufacturing 2005=100 81.1 94.4 89.1 86.1 94.8 95.4 90.5 98.4 95.3 94.2 - IPI: SA: MG: Machinery Industry 2005=100 76.3 96.6 93.8 86.2 95.3 96.0 97.6 92.2 95.4 90.3 - IPI: SA: Manufacturing (Mfg) 2005=100 81.1 94.6 92.3 88.6 92.4 93.0 93.6 90.6 92.5 90.2 - IPI: SA: Mfg: Transportation Equipment (TE) 2005=100 74.4 94.9 82.2 69.2 91.5 89.4 95.4 89.8 100.1 90.6 - Motor Vehicle Production (MVP): JAMA Unit 7,934,057 9,628,920 1,905,700 1,524,334 2,378,023 790,325 704,096 883,602 904,254 838,135 - Building Construction Started Sq m th 115,486 121,455 28,805 32,187 34,352 12,274 12,337 9,741 10,364 10,645 - CPI 2005=100 100.3 99.6 99.2 99.4 99.4 99.3 99.5 99.5 99.6 - -

South KoreaIPI: SA: Manufacturing 2005=100 119.3 139.6 150.0 150.3 149.8 151.2 148.2 149.9 149.1 148.7 - Motor Vehicle Production: KAMA Unit 3,512,926 4,271,741 1,080,942 1,221,658 1,086,223 391,786 320,433 374,004 414,608 428,350 424,981 Buildings Commenced Unit 170,136 188,470 40,202 59,546 48,067 15,545 16,163 16,359 18,260 17,680 -

ChinaIPI: % Change % 12.3 14.1 14.9 13.9 13.8 14.0 13.5 13.8 - - - Industrial Production: Automobiles Unit th 14,195,800 18,755,000 5,056,000 4,476,000 4,432,000 1,318,000 1,450,000 1,664,000 1,605,000 1,793,000 - Machinery: Production: Motor Vehicle Unit 14,194,937 18,759,052 5,056,498 4,477,853 4,436,428 1,319,980 1,451,572 1,664,876 1,604,991 1,791,527 - CPI PY=100 99.3 103.3 105.1 105.7 106.3 106.5 106.2 106.1 105.5 104.2 - Purchasing Managers' Index: Mfg % 52.9 53.8 52.8 51.9 50.9 50.7 50.9 51.2 50.4 49.0 50.3 PMI: Mfg: New Order % 55.4 55.8 54.8 52.2 51.2 51.1 51.1 51.3 50.5 47.8 49.8 PMI: Mfg: Production % 56.5 56.8 54.9 54.4 52.4 52.1 52.3 52.7 52.3 50.9 53.4 FAI: ytd: SI: Manufacturing RMB mn 33,246,619 41,755,049 2,553,823 9,698,981 18,824,527 5,288,275 6,242,127 7,294,125 8,276,890 9,223,935 - FDI: Utilized: ytd: Construction USD mn 3,409.4 5,973.1 390.2 1,132.8 1,585.7 454.1 499.6 631.9 667.5 767.8 -

USIPI: SA 2007=100 85.5 90.1 92.8 92.9 94.3 94.2 94.4 94.4 95.0 94.8 - IPI: SA: Consumer Goods 2007=100 88.0 91.7 93.3 93.0 93.9 93.8 94.1 93.9 94.3 93.9 - IPI: SA: Mfg: Machinery 2007=100 75.6 80.8 89.8 90.0 91.3 91.5 91.0 91.5 92.1 92.4 - Manufacturing Industries: SA: Inventories USD mn 6,244,012 6,378,795 1,717,097 1,776,563 1,801,054 598,758 600,709 601,587 607,016 609,814 - Manufacturing Industries: SA: New Orders USD mn 4,239,054 4,784,668 1,306,358 1,328,905 1,355,642 451,885 452,121 451,636 450,932 459,177 - Automobile Inventories Unit th 9,365.2 8,645.9 2,254.5 1,820.1 1,689.9 533.2 560.8 595.9 693.6 781.7 - Automobile: Domestic Production Unit th 2,235,700 2,826,500 702,900 710,100 741,700 229,600 260,400 251,700 274,900 263,800 - Private Housing Units Started Unit th 554 587 126 164 171 58 55 59 53 52 - CPI 2005=100 109.9 111.7 113.5 115.5 116.0 115.7 116.0 116.2 115.9 115.8 -

MexicoIPI: SA: Manufacturing Industries 2003=100 103.9 114.2 119.2 120.0 120.2 120.8 119.1 120.8 120.3 - - Capacity Utilization: Manufacturing % 77.6 79.6 - - - - - - - - - Motor Vehicle Production: AMIA: Total Unit 1,507,527 2,260,774 640,972 615,390 649,297 202,373 221,637 225,287 240,648 231,080 - Construction Output: Total MXN mn 216,923 223,710 35,608 - - - - - - - -

CanadaIPI: SA % 102.8 106.4 108.7 108.7 109.4 109.2 109.3 109.7 - - - PMI % 51.6 57.9 61.3 65.0 55.5 45.4 57.6 63.4 55.6 57.1 53.6

European Indicators IPI: SA 2005=100 90.8 97.5 101.0 101.2 101.9 101.7 103.0 101.0 100.9 - - IPI: SA: EU 27: Manufacturing (Mfg) 2005=100 92 99 103 103 104 103 105 103 103 - - Construction Production Index: SA: EU 27 2005=100 93.9 90.0 89.3 90.7 90.7 91.3 91.0 89.9 88.7 - - EU: Harmonized Consumer Price Index 2005=100 108.1 109.9 111.4 113.2 112.9 112.5 112.7 113.5 113.9 114.0 - EU: Consumer Price Index: % Change 2005=100 0.3 1.6 2.5 2.8 2.7 2.5 2.5 3.0 3.0 3.0 -

FranceIPI: SA 2005=100 87 92 95 94 64 95 96 - - - - IPI: Mfg: Transportation Equipment (TE) 2005=100 77 84 93 93 74 80 45 96 95 - - NBCA: No of Housing (NH): France Metropolitan Sq m th 34,598 33,497 8,528 8,519 9,047 3,188 2,851 3,008 3,952 2,659 -

GermanyDE: IPI: SA 2005=100 94 105 112 114 79 119 118 - - - - Motor Vehicle Production 2005=100 434,155 492,165 - - - - - - - - - Construction Started: New Bldg (NB): Total Unit 21,196 22,919 5,381 6,680 6,603 2,267 2,292 2,044 2,267 - - Construction Orders Value Index: Total 2005=100 107 109 103 129 130 134 126 129 109 - -

UKMotor Vehicle Production: Car Unit 999,392 1,271,816 357,230 305,622 320,395 98,094 86,250 136,051 128,654 136,111 - IoP: Manufacturing (Mfg) 2006=100 87.4 90.6 90.3 91.8 29.9 89.6 - - - - -

ItalyIPI 2005=100 83.2 88.6 89.4 94.1 81.7 95.7 54.9 94.5 90.8 - - IPI: Mfg: Transport Equipment 2005=100 88.3 91.6 95.1 100.6 78.7 98.9 41.4 95.9 92.0 - -

RussiaIPI: Manufacturing (Mfg) 2008=100 1,104.9 1,435.7 1,495.4 1,773.0 1,857.3 1,787.5 1,866.1 1,918.3 1,921.1 1,984.8 - CPI Dec2005=100 147.4 157.5 - - - - - - - - - FCI RUB bn 7,976.0 9,151.4 1,353.0 2,245.0 2,757.5 802.0 920.0 1,035.5 1,097.0 1,138.0 -

TurkeyIPI:SA 2005=100 102.7 117.0 126.1 124.1 125.2 126.6 123.5 125.5 130.8 127.5 - IPI:SA Manufacturing Industry 2005=100 99.7 115.0 116.6 124.3 121.6 124.5 114.7 125.6 138.4 131.6 - IPI: Capital Goods 2005=100 89.9 113.2 126.9 137.4 123.4 141.2 98.7 130.4 140.5 135.9 - Motor Vehicle Production Unit 674,496 674,496 168,624 168,624 168,624 56,208 56,208 56,208 56,208 56,208 56,208 Consumer Price Index (CPI) 2003=100 164.3 178.4 183.7 188.4 188.7 187.3 188.7 190.1 196.3 199.7 200.9

BrazilIPI: SA 2002=100 116 128 130.3 129.8 128.8 129.7 129.5 127.1 126.3 126.6 - IPI: SA: Manufacturing 2002=100 115.5 127.5 129.9 128.8 127.5 128.6 128.2 125.5 123.6 125.4 - IPI: SA: Capital Goods 2002=100 150.5 182.4 192.2 189.5 190.8 192.7 196.0 183.7 179.5 182.4 - Capacity Utilization: Manufacturing: SA % 79.9 82.3 83.1 82.4 82.0 82.0 82.2 81.7 81.4 - - Motor Vehicles Production: Total Unit 3,182,923 3,642,688 901,945.0 - - - - - - - - National Consumer Price Index: INPC: General Dec1993=100 3,050 3,206 3,348 3,408 3,435 3,420 3,434 3,450 3,461 3,481 3,498

ArgentinaIPI: SA 2006=100 105 108 115.7 68.7 - - - - - - - IPI: Motor Vehicles 2006=100 85.7 99.5 109.3 71.2 - - - - - - - Motor Vehicle Production Unit 512,924 716,540 159,486 232,812 235,260 70,628 84,655 79,977 73,237 75,564 52,412 CPI 2005=100 84.7 100.5 112.0 108.9 111.9 111.2 114.8 109.7 111.2 - -

IndiaIndustrial Production Index (IPI) 2004-05=100 148 162 179.0 167.9 164.1 167.2 161.7 163.5 158.1 - - Industrial Production Index: Manufacturing 2004-05=100 121.3 130.7 141.4 127.6 116.7 124.1 116.7 109.4 120.9 - - Industrial Production Index: Capital Goods 2004-05=100 20.1 20.3 93.0 - - - - - - - - Motor Vehicle Production: Total Unit 12,869,949 17,064,523 4,801,276 4,839,085 5,149,720 1,677,260 1,682,193 1,790,267 1,594,780 1,804,223 - Foreign Inward Investment USD mn 47,930 36,135 3,567 16,191 4,308 2,659 1,033 616 718 - - Foreign Inward Investment: Direct USD mn 26,818.0 21,947.0 3,391.0 13,441.0 5,694.0 1,099.0 2,830.0 1,765.0 1,160.0 - -

Sources: CEIC. Notes: SA: seasonally adjusted, CPI: Consumer price index, IPI: Industrial production index, PMI: Purchasing Managers Index, FCI: Fixed Capital Investment

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14 Aluminium and Raw Materials Weekly Market Tracker Market Tracker 09 January

Demand Indicators

Prices and other information contained in this publication have been obtained by Metal Bulletin Research (“MBR”) from various sources believed to be reli-able. This information has not been independently verified by MBR. Those prices and price indices which are evaluated or calculated by MBR represent an ap-proximate evaluation of current levels based upon dealings (if any) that may have been disclosed prior to publication to MBR. Such prices are collated through regular contact with producers, traders and purchasers although not all market segments may be contacted prior to the evaluation, calculation, or publica-tion of any specific price or index. Actual transaction prices will reflect quantities, grades and qualities, credit terms, and many other parameters. The prices are in no sense comparable to the quoted prices of commodities in which a formal futures market exists.

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