JOHANNESBURG (miningweekly.com) – Global aluminium producers are likely to experience solid financial recoveries in the year ahead, following years of financial austerity, as prices remain elevated, global research firm BMI said on Tuesday.
This would result in targeted acquisitions of specific, value-added aluminium producers and a modest uptick in spending, the firm added.
BMI noted, however, that owing to a government-led push for consolidation in China and overleveraged Western firms looking to offload assets, the rising value and quantity of international aluminium merger and acquisition (M&A) activity will face regulatory headwinds.
Deals are set to increasingly run into regulatory setbacks, as the Chinese government looks to contain rising debt in the economy and the US government prioritises domestic production over free trade.
“While we expect aluminium prices to stabilise over the coming years and [although] prices experienced a solid rally at the beginning of 2017, producers will remain committed to lowering operating costs to withstand further volatility,” BMI said.
BMI expects aluminium producers will also increasingly move up the value-chain by venturing into the downstream business, where booming demand is bolstering profitability.