Tuesday 5th November 2019 |
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Aluminium prices fell for another month as global mining giant Rio Tinto reviews the future of the Tiwai Point aluminium smelter, including possibly closing the site near Bluff.
The ANZ commodity price index showed aluminium prices were the only locally produced raw material to fall in October, down 1.6 percent in October and 15 percent less than a year ago.
The 48-year-old smelter is 79.4 percent-owned by Rio Tinto, which has been selling or shutting smaller, older plants worldwide to focus on its most profitable operations.
The plant, which employs about 990 staff and contractors, makes more than 340,000 tonnes of aluminium annually and is the country’s biggest electricity user. It restarted its fourth pot line a year ago as part of a bid to improve its viability but has since suffered from a combination of low aluminium prices and high alumina prices.
A key point of contention for the smelter's owners is the transmission pricing framework, which doesn't offer South Island energy users any reward for being close to the source of electricity production.
"Aluminium exported from New Zealand is of high quality and typically commands a premium, but the economics of producing aluminium at Tiwai Point is under review by the smelter owner, Rio Tinto, who has threatened to close the plant if they are not able to renegotiate a cheaper electricity supply," ANZ agriculture economist Susan Kilsby said in a note.
The ANZ world commodity price index lifted 1.2 percent in October after being unchanged in September. It was up 7.2 percent in the past year. In local currency terms, the October index rose 1.5 percent and was up 9.7 percent on the year.
Dairy prices rose 0.4 percent in October and milk powder continues to display strength, as demand for powder products in developing markets remains robust, said Kilsby. Cheese and butter prices were under some pressure as European products were more competitive on global markets than normal, she added.
The meat and fibre index increased 3.3 percent during October, continuing upward momentum present throughout the year. Lamb prices lifted 3.2 percent to reach a record, while beef prices lifted 4.5 percent.
Beef prices were now a third higher than a year earlier thanks to strong international demand from both China and the United States more than offsetting elevated supply as the ongoing drought in Australia has forced farmers to reduce stock numbers.
The horticulture index lifted 1.7 percent in October while the forestry price index was up 0.4 percent. According to Kilsby, forestry prices are gradually recovering from the sharp correction earlier this year but were still down 10 percent on the year.
(BusinessDesk)
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