Qatar Aluminium Sees Demand Rising 6% as Autos Dominate

Aluminum demand is growing 6 percent a year with the automobile market taking up more than half of output at Qatar Aluminium Ltd., the joint venture of Qatar Petroleum and Norsk Hydro ASA.

Automobile customers account for 60 percent of Qatar Aluminium’s products, Chairman Abdulrahman Ahmed Al-Shaibi said Tuesday at a conference in Doha. The drop in oil prices has not affected demand as the company is operating its factory at capacity, he said.

Aluminum prices have climbed 4.3 percent in the past year, outperforming copper, gold and Brent crude, as Ford Motor Co. introduced aluminum-bodied F-150 pickups compared with a mostly steel predecessor. Qatar Aluminium will wait to expand until stockpiles decline more, Chief Executive Officer Tom Petter Johansen said in an interview.

“There is still a lot of aluminum in stock globally,” Johansen said. “The stock should go down before we push more metal into the market.”

Aluminum for delivery in three months dropped 0.4 percent to $1,794.50 a metric ton on the London Metal Exchange on Tuesday. Inventories of the metal in warehouses monitored by the LME stand at 3.9 million tons, double the combined total held in copper, lead, nickel, tin and zinc.

Qatar Production

Qatar Aluminium, known as Qatalum, built its plant in Qatar with plans to double production to 1 million tons a year. Output was 612,000 tons last year and another plant won’t be built for at least two years, Johansen said.

Automobile companies are targetting aluminum to reduce emissions and improve fuel efficiency, Citigroup Inc. said in a report dated March 3. “The most promising sector is the automotive sector,” Johansen said.

Lower oil prices may reduce the fuel-efficiency driver behind auto aluminum demand, David Wilson, an analyst at Citigroup, said in the report. Brent crude has dropped 45 percent in the past year.

At the same time, manufacturers are trying to develop alloys that contain more recycled metal, Wilson said. “At a 75 percent recycled metal content rate, current aluminum auto body usage projections would add only 800 kt to primary aluminum demand by 2020, not a volume to drive market deficits,” he said.

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