The global alumina market was balanced at the end of 2012 influenced by supply disruptions, mainly in India. Chinese alumina imports for 2012 amounted to 5 million mt, up from 1.9 million mt in 2011, driven by favorable price differentials and limited bauxite availability. Bauxite and alumina prices have been strongly influenced by developments in China, which is heavily dependent on imported bauxite. During the year, the price of imported bauxite in China rose more than ten percent, the highest level since 2008. The increase resulted from temporary restrictions and export tax on Indonesian exports. As a result of the future uncertainty regarding the availability of bauxite from Indonesia, China is facing supply challenges in the Pacific region and substantially higher freight costs for bauxite sourced from the Atlantic region.
Global demand for primary aluminium excluding China increased moderately compared to 2011. Corresponding production decreased, mainly due to closures and substantial production disruptions. As a result, the market was relatively balanced in 2012. Annualized production increased in the final quarter of 2012, amounting to 25.6 million mt. Annualized consumption declined, however, amounting to 25.1 million mt. New greenfield projects are expected to come on stream during 2013. Demand for primary aluminium is expected to grow by about 2-4 percent in 2013.
Demand for extrusion ingot and foundry alloys in Europe weakened during 2012 and is expected to remain soft into 2013. Consumption of sheet ingot was stable compared to 2011. No significant increase in consumption is expected in 2013. The market for wire rod exhibited a solid increase during 2012 and is expected to continue with a positive development into 2013. In the U.S. and Asia, demand for extrusion ingot and foundry alloys has been positive during 2012 and is expected to remain so in 2013.
The European market for flat rolled products declined compared to the previous year. Most of the decline occurred in the first half of 2012 due to strong demand and restocking activities in the first half of 2011. Demand in the second half of 2012 remained around the same soft level experienced in the corresponding period of 2011.
European demand for extruded aluminium products declined for all market segments compared to 2011 and in Southern Europe in particular. Compared to 2011, demand in North America grew substantially with most of the increase supplied by domestic extruders. South American extrusion demand weakened somewhat compared to 2011. Weak demand is expected to continue in Europe in the first quarter of 2013, while the outlook for markets outside Europe is more positive.
Power production in Norway amounted to 146 TWh in 2012, which is 20 TWh higher than in 2011. Hydro's water reservoirs and snow levels were close to normal at the end of 2012. Production is expected to be seasonally high through the first quarter of 2013.
