WCA May 2007

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From the Americas
30 Wire & Cable ASIA – May/June 2007
National Association for Business Economics (Washington,
DC): US gross domestic product will likely expand by
2.5% in 2007, down from an expected 3.3% last year,
according to a panel of 50 forecasters.
The big question is, of course, whether the US economy will
slow gradually while avoiding a jump in inflation – for a so-
called soft landing – or slide into a recession, which could
seriously stifle global growth.
Latin American economies are expected to do well in
2007, with this qualification: the region is a big exporter
of commodities such as copper and iron ore, so any
global economic shocks – eg an unexpected slump in
China – would have severe repercussions.
Brazil: Growth is seen accelerating to 3.4% this year
after an approximate 3% last year. President Luiz Inacio
Lula da Silva has brought inflation down to 3.2%,
considered an amazing accomplishment.
Mexico: Growth of 3.7% is expected this year, down
from 4.7% last year. But inflation has dropped to a
record low, the nation’s currency is stable, and nearly
1 million jobs have been created.
Argentina: The strong comeback after the economic
meltdown of 2002 is expected to continue, with
experts predicting growth in gross domestic product
of 7% this year. Construction is booming, and
unemployment – which reached a record high of 21.5%
in 2003 – is below 10%.
Metals
Canada’s Alcan flourishes
on scarcer aluminium, higher prices
Alcan Inc reported a fourth-quarter 2006 profit of
US$422 million as tight supplies of the metal boosted prices
30%, more than making up for a drop in shipments. The
price of aluminium sold by Alcan rose $620 in the quarter,
to $2,712 a ton from $2,092 a year earlier, while ship-
ments contracted from 1.096 million tons to 1.09 million.
Montreal-based Alcan said its quarterly sales jumped 23%,
to $6.22 billion.
The world’s second-largest aluminium producer foresees
rising output creating a small surplus of the metal this year.
As reported by Bloomberg News (31st January), Alcan said
global production will outpace growth in demand, ending
the supply deficit that sent prices in May 2006 to their
highest level in at least 19 years.
With copper prices having more than tripled over the past
four years, Alcan is seeing ‘very strong’ demand from
the cable and electric-conductor markets as industrial
consumers increasingly use aluminium as a substitute
for copper. Accordingly, in a 31st January interview with
Bloomberg ’s Dale Crofts, Alcan CEO Richard Evans said
the company plans to spend $1.8 billion in Quebec to
acquire as much as 450,000 metric tons of additional
smelting capacity.
Aerospace demand for aluminium is also gaining, and Alcan
is seeing growth in emerging markets such as Russia.
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The company is closing aluminium plants in Europe to build
new ones in Iceland and Oman, where electricity is cheaper.
Alcan expects world aluminium demand to rise about
6.7% this year – after a 6.8% gain in 2006 – and production
to accelerate, jumping 7.8% after a 6.3% increase last year.
Global output will exceed demand by about 200,000 tons,
erasing a deficit last year of 160,000 tons, the company
said.
Another Alcan executive, Carmine Nappi, head of industry
analysis, told Bloomberg that China may increase demand
by 19% this year after gaining 17% in 2006. The world’s
biggest aluminium user, China now accounts for about a
quarter of world demand, Mr Nappi said.
Of related interest . . .
Novelis Inc (Atlanta, Georgia), the aluminium sheet roller
spun off from Alcan in 2004, said on 26th January that it
was in talks that could lead to the sale of the company.
According to the Hindustan Times, India’s Aditya Vikram
Birla group may be preparing a bid of as much as
$6 billion for Novelis.
The Times’s Arun Kumar reported that sources in the
investment banking industry say the acquisition would
make the Indian conglomerate’s Hindalco Industries
Ltd ‘the world’s largest player in the downstream
aluminium business involving value-added products.’
If Novelis does go to the Birla group for top dollar, the
sale would tend to confirm Alcan’s view that the rally in
metals has made assets overpriced. Novelis’s market
value is about $2.7 billion.
The Brazilian steel company Companhia Siderurgica
Nacional SA, or CSN, has been outbid by Mumbai-
based Tata Steel in a rivalry to acquire the Anglo-Dutch
steelmaker Corus. On 31 st January the Indian company
– a unit of the Tata Group conglomerate – made a new
offer of $11.3 billion for Corus, representing a 22%
premium to an already sweetened offer it made last
autumn. That offer was later trumped by CSN, setting
off a bidding war that led London-based Corus to hold
the January auction in which Tata prevailed after several
rounds of bidding.
The takeover will help extend Tata Steel’s reach into
Europe and propel the company – now 56th in the world
as measured by output – into a global player, Tata said.
The Tata-Corus combination could produce 25 million
tons of steel a year, making it the world’s fifth-largest
steel producer.
GE and Hitachi will merge their nuclear
businesses, seek US clients
In another sign of global retrenchment in the nuclear power
industry, General Electric, of the US, and Hitachi, of Japan,
will merge their nuclear power businesses that provide
services to owners of existing reactors and build new
ones. GE, based in Fairfield, Connecticut, competes with
Westinghouse Electric (owned by Toshiba, of Japan) and
with the French-German consortium Areva to sell reactors
in the United States. Interest in nuclear power is reviving in
that market as a result of high energy prices and concern
about dependence on oil imports.
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