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Bahrain's Alba says Europe wary of ordering aluminium for next year

·1-min read

By Joan Faus

BARCELONA (Reuters) - European customers are reluctant to place orders for next year due to worries about a recession, spurring a fall in demand, the head of Aluminium Bahrain (Alba) said.

"Overall demand is lower... because of people hesitating to order," Alba Chief Executive Ali Al-Baqali told Reuters on the sidelines of an aluminium conference in Barcelona.

"Many (European) customers have an order book, but they don’t have certainty on when they are going to take the metal because they are afraid that if they book the full quantity, then the recession starts."

A decline in prices together with costs that have shot up about 30% since 2020 is weighing on the business, Al-Baqali said.

"The profitability...in the first half is not there anymore, the challenge now is how we are going to break even," he said.

Industry association Eurometaux has said that about half of the European Union's aluminium production capacity has been forced offline due to high power prices that have surged since Russia's invasion of Ukraine.

The London Metal Exchange three month price, which jumped to a record of over $4,000 a tonne in March, is now trading at around $2,300 a tonne.

"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."

Alba is currently producing about 1.6 million tonnes a year, which is slightly above capacity, Al-Baqali said.

(Reporting by Joan Faus, writing by Eric Onstad; Editing by Bernadette Baum)