Lme Aluminum

In: Business and Management

Submitted By cbuscpa
Words 334
Pages 2
Alusaf Hillside Project

1. Is primary aluminum production an attractive industry? Why or why not?
I consider primary aluminum production is not an attractive industry because : a. The product is identical (ie, aluminum), all the companies procure the same resources to make production with same production line and process. The firms only differentiate in terms of controlling and lowering the variable cost in order to make a profit as a price-takers. Pricing is somehow fix in global level as aluminum is openly traded in the financial market. b. Intensive rivalry and perfect competition. Since the collapse of the Soviet Union and Russia and the other former Soviet states surged the supply and flooded world markets while having price remains historical low in 1993.

2. At the market price of $1,110 per ton, given the supply curve you have derived, how much would be supplied under the assumption that all plants are profit maximizers?

If all plants are profit maximizers, the capacity will be landed at where average variable cost = price, ie, $1,110. From the industry 1993 supply curve, the capacity at 19,412 thousands tpy when variable cost close to $1,110 (to be exact at $1,108.02).

3. At what rate do you expect primary aluminum demand to grow over the coming years (note that primary aluminum demand is total demand less scrap production)? What do you expect the price of aluminum to be in 5 years from 1993?
From the industry supply curve, the capacity reached 19,412 thousands tpy when aluminum price at $1,110. In the perfect competition market, the demand will be the primary production capacity minus scrap production, ie : 19,412 – 950 (idled production from the Western producers) thousand tpy = 18,462 thousands tpy.

With reference to CAGR, the demand in 5 years later will be :
(1.02)5 x 18,462 = 20,384 thousands tpy

The demand in 10…...

Similar Documents

Lme Contracts

...11 12 Overview Futures TAPOs (Traded Average Price Options) Traded options LMEminis 1 Overview The London Metal Exchange (LME) is the world’s premier industrial metals market – more than two thirds of global non-ferrous futures and options trading is conducted on the LME. The price derived from trading is used as a reference price in the majority of the world’s physical metal markets. Located in the City of London, the LME’s membership is global, with more than 95% of the business conducted on its markets coming from outside the United Kingdom. The Exchange provides three core services which underpin all activity; • • • Pricing Hedging Physical delivery (the LME acts as a market of last resort) The market itself can be accessed via three different trading platforms, the Ring (open-outcry), LMEselect (electronic trading) and through 24-hour inter-office telephone trading. Prompt date/settlement (delivery) date summary for LME contracts The LME’s physical delivery model allows the Exchange to offer a unique prompt date structure for futures contracts which matches the requirements of physical industry for the pricing of physical material. A summary of this is shown below. (1) Weekly contract settlement takes place every Wednesday (2) Monthly contract settlement takes place every third Wednesday LME Aluminium and LME Copper Daily: Weekly (1): Monthly (2): Cash 4 months 7 months Cash 4 months 7 months Cash 4 months 7 months Cash 4 months 7......

Words: 3060 - Pages: 13

Aluminum Matrix Composite

...Aluminum matrix * Continuous fibers: boron, silicon carbide, alumina, graphite * Discontinuous fibers: alumina, alumina-silica * Whiskers: silicon carbide * Particulates: silicon carbide, boron carbide STIR CASTING METHOD OF FABRICATION OF MMCs * Liquid state fabrication of Metal Matrix Composites involves incorporation of dispersed phase * into a molten matrix metal, followed by its Solidification. * In order to provide high level of mechanical properties of the composite, good interfacial * bonding (wetting) between the dispersed phase and the liquid matrix should be obtained. * Wetting improvement may be achieved by coating the dispersed phase particles (fibers). Proper * coating not only reduces interfacial energy, but also prevents chemical interaction between the * dispersed phase and the matrix. * The simplest and the most cost effective method of liquid state fabrication is Stir Casting. * 26 * Stir Casting * Stir Casting is a liquid state method of composite materials fabrication, in which a dispersed * phase (ceramic particles, short fibers) is mixed with a molten matrix metal by means of * mechanical stirring. * The liquid composite material is then cast by conventional casting methods and may also be * processed by conventional Metal forming technologies. * Stir Casting is characterized by the following features: * Content of dispersed phase is limited (usually not more than...

Words: 3738 - Pages: 15

He Aluminum Industry in 1994

...The Aluminum Industry in 19941  and  Aluminum Smelting in South Africa: Alusaf’s Hillside Project2  1) Is primary aluminum production an attractive industry? Why or why not?  Within the framework of the Structure-Conduct-Performance (SCP) model3, the primary aluminum production industry (“the industry”) in 1994 can be described as perfectly competitive. The industry is characterized by a large number of competing firms – the largest of which has only 4.1% of total industry capacity; homogeneous, commodity-type products and low-cost entry and exit into and out of the industry (assuming capital is available where returns are greater than cost of entry). Within the industry, market prices are established via a commodities exchange (the London Metal Exchange, or LME) and individual firms have little ability to set market prices. In a perfectly competitive industry social welfare is maximized – due largely to the lack of product differentiation and the number of competitors, while expected firm performance is normal.  In the early 1990’s the collapse of the Soviet military caused Russian and other Soviet State smelters to flood the market with capacity that had previously supplied military needs. During 1993, LME inventories of primary aluminum increased by nearly a million tons, to over 2.5 million tons, while producer inventories increased by over 300,000 tons. This surge in supply & inventory levels drove world aluminum prices to all-time lows - $1,110/ton at the......

Words: 1568 - Pages: 7

Liquid Metal Embrittlement (Lme)

... LIQUID METAL EMBRITTLEMENT (LME) RAGHAV MOHAN Graduate Student M.S in Technical Entrepreneurship and Management University of Rochester INTRODUCTION Liquid metal embrittlement (LME) is a phenomenon of practical importance, where certain ductile metals experience drastic loss in tensile ductility or undergo brittle fracture when tested in the presence of specific liquid metals. Generally, a tensile stress or a residual stress is needed to induce embrittlement. Many mechanisms were proposed to explain the phenomenological characteristics of LME. The significance of liquid metal embrittlement is revealed by the practical observation of several structures experiencing ductility losses and cracking during hot dip galvanizing or during subsequent fabrication. Liquid metal embrittlement effects can be observed even in solid state, when one of the metals is brought close to its melting point (e.g. cadmium-coated parts operating at high temperature). This phenomenon is known as solid metal embrittlement. OBSERVATIONS OF LME Mechanical structures are typically a space frame fabricated from parallel large diameter tubes, called chords, cross braced by smaller diameter perpendicular and diagonal tubes(e.g. sign bridge structures over freeway) .After welding, the structure is hot dip galvanized. The hot dip galvanizing process consists of submerging the structure in a bath of molten zinc. This leaves a relatively uniform zinc coating over the entire......

Words: 2194 - Pages: 9

Alcoa Began Under the Name of the Pittsburgh Reduction Company in 1888, Changing Its Name to the Aluminum Company of America (Alcoa) In1907

...Alcoa began under the name of the Pittsburgh Reduction Company in 1888, changing its name to the Aluminum Company of America (Alcoa) in1907. The company was originally founded on a $20,000 investment to capitalize on Charles Martin Hall’s invention to smelt bauxite ore into the metal known as aluminum. Within a few years, Alcoa had developed into a model of large-scale vertical integration with control over all the inputs to aluminum production. Since its inception, Alcoa has had a very strong values-based culture. Employees learned early in their careers that very decision they made and everything they did must be aligned with the company’s values. In 1985, Fred Fetterolf, then president, decided the company needed to document the values that all employees must live by; Integrity; Environment, Health, and Safety; Customer; Accountability; Excellence; People; and Profitability. (In 2012, Alcoa slightly revised its core values – Integrity; Environmental; Health and safety; Excellence ; Respect and Innovation) In the 1990s Alcoa’s CEO, Paul O’Neil, communication his answering belief in the importance of health and safety-one of the company’s core values. As is the case with many large organizations, Alcoa had implemented a global ethics and compliance program, and focus on health and safety was interwoven through the company’s program. The Alcoa program included all the basic elements specified in the U.S Federal Sentencing Guidelines and Sarbanes –Oxley Act. Alcoa had...

Words: 2344 - Pages: 10

Aluminum in South Africa

...Aluminum Assignment 2. We predict in the next several years that the primary aluminum demand will increase, but at a slower rate that it has been historically. * We predict a temporary increase in aluminum pricing due to production restrictions imposed by CIS and US producers beginning in 1994. However, the price reduction will be temporary, as the LME warehouses have inventory at historic highs of 2.5 thousand tons of aluminum, which could be sold at any time. Furthermore, the US has agreed to temporarily idle production of 950 thousand tons of aluminum in an attempt to inflate prices. However, this is a short term solution, as production cannot be idled for a long period of time without severe damage to the aluminum production line. * The consumption of aluminum by the Western world has increased over the last 5 years, but at a much slower rate than in the past 10 years. Additionally, the secondary aluminum market has been increasing, and serves as competition for the primary aluminum market. By 1994, the secondary aluminum made up 25% of worldwide product and saw a 5 year CAGR of 3.7%, while the CAGR for primary aluminum had decreased to a rate of 1.4% worldwide. The startup cost for a secondary aluminum plant is far lower than that of a primary aluminum plant. The operational cost of the secondary aluminum plant is far lower than that of a primary aluminum plant, requiring about 5% of the energy needed to operate a primary aluminum plant. As a result, there will...

Words: 839 - Pages: 4

State of the Science on Aluminum Structural Bridge Components

...State of the Science Although research on in-place aluminum bridge decks is scant, bridge failures and deteriorations over the past decade inspired engineers toward determining the structural integrity of aluminum alloys in bridge rehabilitation. Recent studies, examining the corrosive effects of acidic and salt atmosphere on aluminum bridge decks indicates the material is expected to endure for at least 30-years (Li, et al., 2010). Furthermore, the Virginia Department of Transportation conducted a series of tests, including service and ultimate load test using Reynold’s deck system (Dobmeier, 2001). The results of Dobmeier, et al.’s (2001) experiment, “clearly demonstrates that aluminum bridge decks are a feasible alternative to reinforced concrete decks”. When considering alternatives for bridge deck replacements, the structural engineer must evaluate the life cost of materials chosen. Specifically, although the material cost for aluminum bridge decks is higher than for structural steel, the cost for fabrication, construction and length of serviceability prove cost effective when compared to steel (Ghaswala, 2010; Tindall, 2008; Walbridge & de la Chevrotiere, 2012). Specifically, with a per unit weight that is about one-third that of structural steel, construction methods are simplified and time for rehabilitation reduced (Ghaswala, 2010). Furthermore, maintenance costs are greatly reduced with aluminum decks, which eliminate the need for protective coating (beyond...

Words: 1490 - Pages: 6

Dangers of Aluminum Powdered Tanks and Titanium Machining Shops

...Title of Paper Name School Chemistry Instructor's Name Feb 01, 2015. Dangers of Aluminum Powdered Tanks and Titanium Machining Shops Experts have suggested that storage tanks that were formerly painted with products containing aluminum powder should be grounded. The aluminum powder was initially mainly meant to reflect heat from these tanks. Furthermore it was also recommended that only non-combustible material should be stored in these tanks since the aluminum powder is a pyrophoric substance. Grounding the storage tanks will help in avoiding development of static charges on the tanks which might cause an ignition of fire especially if combustible material is in the tank. Experts also suggest that grounding them will reduce the chances of a lightning strike. Meyer (2010) argues that if only nonflammable material is stored in these tanks, the risk of fire and explosions will be greatly reduced Every machining or milling shop should have in place a plan for preventing and suppressing fires. Most businesses that close due to fires never reopen. In whole large sizes, titanium is not very dangerous. Lathe machines, during fabrication process, produces very fine grains of titanium. When titanium chips and grains get very hot, hey ignite readily. They pose a danger of fire and explosion to lathe machine operations. Such fires ignited by metals are classified under class D fires. They are considered fatal since the fires are of a high temperature and rapidly react with......

Words: 351 - Pages: 2

Aluminum Paint

...Experts recommended grounding the tanks because it would protect them from lightning strikes and static electricity (Meyer, 2010). In addition, experts also recommended storing only noncombustible materials in tanks that were painted with products that contained aluminum powder because aluminum powder is a pyrophoric material (Meyer, 2010). Naturally the hazardous condition would be virtually eliminated by only storing noncombustible materials in the tanks. According to Meyer (2010) once the solvent in the coating has evaporated what remains of the paint should be considered a flammable and in the case of aluminum dust remnants, pyrophoric as stated above. Using paint consisting of aluminum already creates a risk of fire and explosion. Add to that an ignition source and a tank full of combustibles, and one could see to what extent that would add to an already hazardous situation (Meyer, 2010). Titanium much like other metal such as aluminum is not hazardous in bulk form. However, as in the case of aluminum, it becomes a pyrophoric material in its finely divided form. Through the fabrication process of metals, remnants of leftover titanium are considered pyrophoric and pose a significant risk of fire and explosion (Meyer, 2010). During the production process titanium remnants have the potential to react with atmospheric moister and cause the hydrogen to combust and can self-ignite (Meyer, 2010). The Use of automatic sprinkler systems can be an effective fire......

Words: 254 - Pages: 2


...KPIs of Century Aluminum Some of the key determinants of our results of operations and cash flow from operations are as follows: Pricing: Increases or decreases in primary aluminum prices result in increases and decreases in Century Aluminum revenues (assuming all other factors are unchanged). The company may enter into forward contracts or other hedging arrangements to reduce its price risk, but did not hold any such contracts as of December 31, 2014. The average LME price for primary aluminum for 2014 was $1,867 per tonne, compared to $1,846 per tonne in 2013. The average regional delivery premiums increased in 2014 to $450 per tonne for the U.S. Midwest premium from $244 per tonne in 2013 and $218 per tonne in 2012. The company’s operating results are significantly impacted by changes in the price of primary aluminum and the materials used in its production, including electrical power, alumina, aluminum fluoride and carbon products; and it cannot pass thease additional costs to its consumers. Instead, the company tries to manipulate the prices through the use of fixed costs, negotiating LME-based pricing in some of the raw materials and electrical power contracts. Power supply agreements: Century Aluminum has put some much effort in negotiating power contracts within the regions they operate in. For example, the company managed to secure a power contract with a local supplier to sell to Hawesville plant at market price. This gives the company some room when it......

Words: 315 - Pages: 2


...Pregunta 1. Usando la información proporcionada sobre aluminio construya y estime la oferta de la Industria para el aluminio primario. Dado que cada planta tiene diferente tecnología dependiendo de su antigüedad y cada tecnología produce con un costo variable determinado, consideramos que la oferta total de la industria puede definirse en base al costo variable, ya que en este tipo de industria el precio es definido por el costo. Por lo que se estimo la oferta de la industria para el aluminio usando la siguiente especificación linear: Q = a + bPE + cPA + dOth + ePpf + fCo +gMA+ hLA + iFR + jGA Donde Q es la capacidad (tpy), PE el precio de la electricidad ($/kWh), PA el precio de la alúmina ($/t alúmina), Oth es el costo de otras materias primas, Ppf el costo de energía de la planta y combustibles, MA el costo de mantenimiento, FR el costo de fletes ,y GA los gastos generales y administrativos. Los resultados de la regresión son los siguientes: Regression Analysis R² 0.243 Adjusted R² 0.196 n 157 R 0.493 k 9 Std. Error 105.476 Dep. Var. Capacity (tpy) ANOVA table Source SS df MS F p-value Regression 524,369.3834 9 58,263.2648 5.24 3.53E-06 Residual 1,635,389.5142 147 11,125.0987 Total 2,159,758.8976 156 Regression output confidence interval variables coefficients std. error t (df=147) p-value 95% lower 95%......

Words: 3136 - Pages: 13

Organizational Behavior - What Barriers to Effective Communication Existed in Aluminum Elements Corp How Did the Author Deal with These What Would You Do Differently

...you are a career coach retained by John Breckenridge to guide him through his next decisions. How would you recommend that John modify his lifestyle and behavior to reduce stress? Should he change jobs? Do you believe he is capable of reducing his stress alone? If not, where should he seek help? Q10. What type of team was formed here? Was it necessary, in your opinion? Q11. Use the team effectiveness model in Chapter 9 and related information in this chapter to identify the strengths and weaknesses of this team’s environment, design, and processes. Q12. Assuming that these four people must continue to work as a team, recommend ways to improve the team’s effectiveness. Q13. What barriers to effective communication existed in Aluminum Elements Corp? How did the author deal with these? What would you do differently? Q14. Identify and discuss why John was upset at the end of the case. What should the writer do at this time? Q15. Identify the different conflict episodes that exist in this case. Who was in conflict with whom? Q16. What are the sources of conflict for these conflict incidents? Q17. What conflict management style(s) did Lapierre, the international team, and Gushin use to resolve these conflicts? What style(s) would have worked best in the situation? Q18. Name two motivating factors at RBS. Q19. Describe the differences between the theories of Taylor and Maslow. Q20. How does RBS’ Total Reward package fulfill Maslow’s higher levels of......

Words: 737 - Pages: 3

Organizational Behavior - What Barriers to Effective Communication Existed in Aluminum Elements Corp How Did the Author Deal with These What Would You Do Differently

...took the Cox-2 inhibitors? Who holds primary responsibility? 6. How many deaths per 100,000 people pose an acceptable risk for a drug to be viewed as marketable? Should individual patients have the right to determine if the risk is too great for them? What roles do organizations and consumers play in maintaining consumer safety? 7. Based on your knowledge of team dynamics, explain why the packaging department is less productive than other teams at Treetop. 8. How should Treetop change the nonproductive norms that exist in the packaging group? 9. What structural and other changes would you recommend that may improve this situation in the long term? 10. What barriers to effective communication existed in Aluminum Elements Corp? How did the author deal with these? What would you do differently? 11. Identify and discuss why John was upset at the end of the case. What should the writer do at this time? 12. Identify the symptoms indicating that problems exist at LaCrosse Industries Inc. 13. Use one or more leadership theories to analyze the underlying causes of the current problems at LaCrosse Industries. What other organizational behavior theories might also help to explain some of the problems? 14. What should Gilbert LaCrosse do in this situation? Organizational Behavior 1. Within the framework of the emotional intelligence domains of self-awareness, self-management, social awareness, and relationship......

Words: 759 - Pages: 4


...Aluminum Aluminum is a silvery white member of boron group of chemical elements. It has Al as a symbol, and its atomic number is 13. Aluminum is not soluble in water under normal circumstances. Aluminum considered as the third most abundant element, and the most abundant metal. It makes up about 8% by weight of the Earth's solid surface. Aluminum metal is a very reactive metal .It is found combined in 270 different minerals. Aluminum History In 1761, Guyton de Morveau suggested calling the base alum alumina. In 1808, Humphry Davy identifies the existence of a metal base of alum. The metal was first produced in 1825 in an impure form by physicist and chemist Hans Christian Ørsted. He react anhydrous aluminum chloride with potassium amalgam, yielding a lump of metal looking similar to tin. Friedrich Wöhler was aware of these experiments and cited them, but after redoing the experiments of Ørsted he concluded that the metal was pure potassium. He conducted a similar experiment in 1827 by mixing anhydrous aluminum chloride with potassium and yielded aluminum. Aluminum Characteristics There are many characteristics of aluminum, and here i will talk about two types of aluminum characteristics:- 1- Physical characteristics: Aluminum is a soft, durable, lightweight, and malleable metal with appearance ranging from silvery to dull gray, depending on the surface roughness. A fresh film of aluminum film serves as a good of visible light and an excellent reflector......

Words: 1080 - Pages: 5

Aluminum Bats vs. Wooden Bats

...Kelly Thomer Sports History Why Aluminum Bats should be Banned from the NCAA Crack! That was the sound of our nation's pastime in the early days of baseball. For nearly 125, years the wooden bat was used in every level of baseball. In Tom's River, New Jersey, the little league World Series is held every summer. Ping! This is the only sound that a spectator will hear during one of those baseball games. What happened to the old-fashioned crack of the bat? The wooden bat has been used in professional baseball since the game's establishment in 1864. An aluminum bat is more dangerous than a wooden bat due to the advanced technology of the aluminum bat, but offers a greater impact to a ball than a wooden bat could. For college ball players hoping to make it to the majors, they should be using the equipment required by the MLB in order to be the most prepared. Also, it makes it harder for scouts to determine how a player will perform under different conditions. This is why I believe the NCAA should play with the same standards as the MLB. The baseball bat controversy has been lingering over amateur baseball since the NCAA (National Collegiate Athletic Association) allowed the use of aluminum bats for the first time in 1974 (Adelson). Every year there is another injury to a pitcher as a result of the aluminum bat due to its exit velocity. The exit velocity of a ball plays a key role in determining the level of risk of injury. It is defined as the speed of the ball off the...

Words: 2293 - Pages: 10