Aluminium prices in the basement

About three percent of New Zealand's export earnings are aluminium products produced by Rio Tinto at the Tiwai Point plant at Bluff. This plant essentially converts Queensland bauxite into high-quality aluminium, using electricty produced at Manapouri. But the international market for aluminium is in the recession doldrums - and faring much worse that most other metals. In fact, in NZ$ terms prices are their lowest since we have been monitoring them starting in early 2008. On a spot basis, they returned just NZ$2,160 per tonne at the close of trading on the London Metals Exchange on 29 May, almost exactly half the price on July 11, 2008 which was the recent market high. In US$ terms, aluminium returned US$1,384 per tonne at the end of May trading. It's high was US$3,291 on July 11, 2008, while its low was US$1,253 on February 24, 2009. The risk for New Zealand is that our rising exchange rate means that production from here cannot participate in the recent small international price uptick, and that Rio will cut back or abandon production here when the inevitable production cutbacks occur in response to weak international demand. And there are real and very expensive infrastructure issues to getting that Manapouri electricty back into the national power grid for general use if Tiwai Point is closed. Click on the fourth tab in this chart ...