The trade dispute between the US and China that has clouded the global growth outlook would have a lasting negative effect on aluminum demand, Norsk Hydro ASA chief executive officer Hilde Merete Aasheim said.
The Oslo-based company on Tuesday pared its demand growth forecast for a second time this year, echoing the dimming outlook painted by top US producer Alcoa Corp last week.
Russian giant United Co Rusal chimed in with similar comments in a trading update on Friday that warned on aluminum demand for the second half.
“With the turmoil that’s going on now, it’s hard to see how it will play out,” Aasheim said in a telephone interview on Thursday.
Asked if she sees aluminum demand bouncing back, she said: “Not at this point.”
Hydro owns Alunorte, the world’s largest refinery that produces alumina — the key raw material for the metal.
Aluminum in London has tumbled 13 percent in the past year amid mounting concerns that trade frictions will dim growth prospects, hurting consumption of the metal used in airplanes, automobiles and beer cans.
The metal for delivery in three months on Friday fell 1.3 percent to US$1,803 a tonne on the London Metal Exchange.
“One thing that hurts global growth over time is uncertainty, it affects people’s ability and willingness to do capital investments and at the end of the day affects individuals ability and willingness to consume,” Hydro chief financial officer Eivind Kallevik said in the same interview.
“It doesn’t mean that if all trade wars are cleared up tomorrow that it would be a great day the day after, but it would certainly send things in a different direction,” Kallevik added.
About 12 percent of smelters are operating at a loss, while capacity additions in China, the world’s top producer and consumer of the metal, have stalled due to low prices, Rusal said in its second-quarter results.
Hydro predicted that this year’s aluminum demand would grow by 1 to 2 percent, compared with a forecast range of 1 to 3 percent in April.
GOLD
The world’s largest gold miner is experiencing some growing pains as it tries to integrate a slew of new assets from its recently completed mega-merger.
Newmont Goldcorp Corp’s shares fell after it posted an adjusted profit that was about half what analysts were expecting in a messy second quarter that included its merger with Goldcorp Inc and the start of a new joint venture with rival Barrick Gold Corp in Nevada.
Although there have been “no surprises” in the acquired Goldcorp assets, underinvestment has been an issue throughout the portfolio, Newmont president Tom Palmer told analysts on Thursday on an earnings call.
“There was not the work done on exploration, there wasn’t the work done on development, and that’s absolutely fundamental in either an open pit or an underground mine,” he said.
Spot gold on Friday climbed about 0.2 percent to US$1,418.90 an ounce, down 0.4 percent for the week.
COCOA CRISIS
Cocoa purchase volumes in Ghana are plunging as crops are being ravaged by disease, people with direct knowledge of the matter have said.
The world’s second-biggest cocoa producer bought 2,502 tonnes of beans from purchasing agents in the first two weeks of the light harvest through July 4, a decline of more than three-quarters from the same period a year earlier, said the people, who asked not to be identified, because they were not authorized to speak publicly about the matter.
Ghana has experienced a severe outbreak of swollen-shoot virus, which can deform cocoa pods and reduce yields.
Additional reporting by staff writer
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