4 FTSE Aluminium stocks in focus as global production comes to a halt in Q2

Summary 

  • Growth in the Aluminium production has slowed down globally in second quarter of 2021.
  • The second quarter production dropped by the 120,000 tonnes with the metal reporting a modest growth of just 0.7% in production output.

Aluminium production growth reported a slowdown worldwide during the second quarter of 2021. During the period, the production dropped by 120,000 tonnes after rising by 590,000 during the first quarter of 2021. As a result, global production of Aluminium was up by just 0.7% year on year with a total production of 13.04 million tonnes during the first half of 2021, with annualised run rates in a downtrend since March this year, according to the latest publication by the International Aluminum Institute (IAI).

China, the world’s largest producer of Aluminium, reported slow growth in production at 1.7% compared to the first quarter. In fact, China imported 294,081 tonnes of Aluminium in June month to meet its domestic demand. The shortfall in production in China was due to the drought-like condition in Yunnan provinces which has the largest hydro-powered Aluminium production, and strict energy consumption policy by the government, which restrict power consumption by the smelters.

Despite the drop in Aluminium production worldwide, the metal prices are in an uptrend and rose to multiyear highs on both London and Shanghai markets recently.

Let us look at some of the FTSE listed metal and mining stocks engaged in Aluminium production:

Rio Tinto Plc (LON: RIO)

FTSE 100 listed company operates in the extraction of metal and processing of resources. The company has a total of five Bauxite mines across the world. Bauxite is the basic raw material that is refined into alumina and then processed into Aluminium by smelters. It is one of the largest Aluminium producers globally, with a total capacity of 3180 metric tonnes.

The company recently reported 13.7 metric tonnes of Bauxite production and 816 kilotons of Aluminium production during the second quarter of 2021. Rio Tinto reduced its Aluminium production at the BC Works Aluminium smelter in Kitimat, Canada, after the strike by the worker union. The production will be reduced by 35% of the smelter’s 432,000 tonnes annual capacity to ensure safe operations by the reduced workforce.

In the last one year, Rio Tinto Plc has given 28.7% returns to its shareholders as of 27 July 2021.

South32 Limited (LON: S32)

South32 is a diversified metal and mining company. Besides Aluminium, the company also does exploration and production of other metals like silver, lead, zinc and manganese ore. It is headquartered in Perth, Western Australia, and the stock has a dual listing on the Australian and London Stock Exchange.

The company reported a record annual Aluminium production of 982 kilotons in the financial year of 2021 at its two refineries benefitting from high plant availability. It also reported 14% year on year rise in zinc production and a 54% increase in nickel production.

In the last one year, the company’s stock has given 33.34% returns to its shareholders, as of 27 July 2021.

Glencore Plc (LON: GLEN)

The multinational company incorporated after the merger of Glencore with Xstrata in 2013, is one of the largest commodities trading companies in the world and has over 60% market share worldwide in tradable zinc. In addition, the company does the production of copper, cobalt, Lead, Nickel, Gold and silver.

The first-quarter metal production of the company was in line with the market expectation with a rise in copper and cobalt production because of productivity improvements at the mines. As a result, the company expects full year EBIT to be on the top half of long term USD 2.2-3.2 billion per annum guidance range. The company has recently acquired entire share in the Cerrejón mine in Colombia from its joint venture partners, BHP and Anglo American for USD 588 million.

In the last one year, Glencore Plc stock has given 76.23% returns to its shareholders as of 27 July 2021.

BHP Group Plc (LON: BHP)

The multinational company operates the natural resources business worldwide. The company is involved in mining, smelting, refining Aluminium and other metals like copper, nickel, iron ore. It is one of the largest publicly listed companies in the world, and its stock has a dual listing on the Australian Securities Exchange and the London Stock Exchange.

The company recently announced about its production output; the record production was achieved at Western Australia Iron Ore (WAIO) and Goonyella mining site for the year ended 30 June 2021. In addition, BHP Plc also achieved its first production output at four major projects site during the year, which will help boost the company’s production output.

In the last one year, BHP Group Plc stock has given 36.16% returns to its shareholders as of 27 July 2021.

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