Customers in Europe are hesitant to place orders for next year due to recession concerns, causing a decline in demand, as stated by Ali Al-Baqali, the Chief Executive of Aluminium Bahrain (Alba).
Ali Al-Baqali commented on the sidelines of an aluminium conference in Barcelona, "The overall demand is lower... because people are hesitating to order."
Aluminum Bahrain was the first aluminium smelter in the Middle East to begin commercial operations in 1971. Alba employs 84 per cent Bahraini nationals, and the company has introduced numerous capacity-building initiatives to increase its nationalization rate.
"Many (European) customers have an order book, but they don't know when they will take the metal because they are afraid that if they book the full quantity, then the recession starts."
Al-Baqali said that declining prices coupled with rising costs have been hampering business.
“The profitability of the first half is no longer there, and now we must figure out how to break even," he said.
European industry association, Eurometaux, the powerful EU voice of non-ferrous metals producers and recyclers, said that high power prices had forced half of the EU's aluminium production capacity offline since the Ukraine-Russia geopolitical crisis.
It is now trading around $2,260 per tonne on the London Metal Exchange after rising to over $4,000 in March.
"We are not in the red, but if the LME continues below $2,000, that will be a red flag for us and the whole industry. The current production at Alba is around 1.6 million tonnes per year, which is slightly above capacity”, Al-Baqali said.
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