Aluminum production is tilting towards the Gulf-and industry giants Rio Tinto, Alcoa Inc. and Norsk Hydro ASA are betting heavily that the region can produce aluminium more cheaply and can grab global market share.
The rush to lower production costs is intense. The aluminium market currently is so oversupplied that market participants say half of the world’s production is unprofitable at current prices.
Producers and state-owned companies hope Gulf production can take advantage of low energy costs locally and lower shipping rates globally. Such a shift comes at the cost of more costly aluminium smelters in Europe and America.
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