Middle East aluminum producers are boosting metal shipments to the U.S. to fill a supply gap left from plant closings.
Electricity costs give Middle East producers the advantage, Jorge Vazquez, managing director of Austin, Texas-based Harbor Intelligence, said in an interview Tuesday in Dubai. Since 1980, U.S. output has dropped from 4.6 million metric tons by 32 smelters to about 700,000 tons by five smelters this year, he said. The last U.S. smelter to open was in 1985, he said.
“Demand in the U.S. is growing but at the same time production is declining, and declining in a significant way,” Vazquez said. “It’s opening an interesting opportunity for vendors outside the U.S.”
Electricity Costs Favor the Middle East
Middle East shipments of value-added aluminum parts to the U.S. in the first nine months of this year rose 50% to about 734,000 metric tons, or 60% of the total, Vazquez said. The cash cost of production in the Middle East was $1,200 a ton in the third quarter, compared with $1,670 a ton in the U.S., he said.
The Middle East aluminum industry started from one smelter in Bahrain in 1971 producing 120,000 metric tons a year to today’s six smelters in Saudi Arabia, United Arab Emirates, Oman, Bahrain and Qatar with output of about 5.2 million tons last year, according to Emirates Global Aluminium. Alcoa Inc. split into two companies as of Nov. 1 after shutting unprofitable smelters and cutting production.
North American demand is now about 7.5 million tons a year, against U.S. output of 750,000 tons and Canadian production of 3 million tons, Tim Murray, chief executive officer of Aluminium Bahrain, told an aluminum conference in Dubai. “Production has to come from somewhere, and I believe it’s going to continue to come from the Middle East.”
By Claudia Carpenter
