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Unformatted text preview: U Toronto, Dept. of Economics, St. George Campus, ECO 204 2009‐2010 This case is copyright material and may not be used for commercial purposes without prior permission UNIVERSITY OF TORONTO, DEPARTMENT OF ECONOMICS ECO 204 2009‐2010 Business Paper 2 Ajaz Hussain THE PRIMARY ALUMINUM INDUSTRY: 1994 & 2010 ____________________________________________________________________________________ In this paper, you will analyze and extend the HBS case The Aluminum Industry in 1994. Ideally, for a proper analysis of the primary aluminum industry in 2010, we should be working with 2010 data, purchasable from the CRU Group for (only) ₤20,000. Unless someone is willing to make a hefty donation, we have no choice but to use this 1994 data set for the paper (the data set contains information on all 157 primary aluminum smelters in 1994). Assume you have been hired to describe and analyze the primary aluminum industry. For example, you could’ve been hired by an investment bank or a hedge fund to model primary aluminum prices and volumes; or by an investor thinking of building or acquiring a primary aluminum smelter. Assume your client has no knowledge of the primary aluminum industry. Your analysis consists of 4 parts: In Part A you will describe and summarize the aluminum industry and primary aluminum smelters in 1994. • In Part B you will analyze the industry in 1994. In particular you will construct the 1994 industry supply curve, and produce forecasts. • In Part C you will describe and summarize the aluminum industry and primary aluminum smelters in 2010 • In Part D you will analyze the industry in 2010. In particular you will modify and extend the 1994 industry supply curve to 2010. The actual paper shouldn’t have 4 discrete parts A, B, C, and D: rather, the paper should flow from one part to the next part. This paper is an opportunity for you to demonstrate your research, quantitative, analytical, business and creative skills. Page 1 of 4 The Primary Aluminum Industry: 1994 & 2010 Pseudo‐case for ECO 204 2009 ‐ 2010 Business Report 2 • U Toronto, Dept. of Economics, St. George Campus, ECO 204 2009‐2010 This case is copyright material and may not be used for commercial purposes without prior permission Part A Start by summarizing the aluminum industry, primary aluminum technology, and primary aluminum smelters in 1994. There is no single right “answer”: rather, what we’re looking for is a comprehensive, insightful description and summary of the aluminum industry. For example: • • • • Discuss and argue whether this is a competitive industry, how and where prices are set, etc. You can even discuss current and future outlooks: will the industry expand? Are we in a bust cycle? Describe the primary aluminum production process and technology. Use resources such as the HBS case, US Geological Survey Minerals Information and the International Aluminum Institute to describe and summarize the industry. Use the 1994 data set to summarize and describe primary aluminum smelters. For example, you could use Excel’s Pivot Table feature to categorize and summarize smelters by type, capacity, country, electricity prices (for example, where are the low electricity cost smelters located?), efficiency (see for example alumina usage per ton of alumina), etc. Or you can use histograms, pie charts, and graphs to summarize and describe the data set (for example, why not use ECO 220 tools to show the correlation between (say) total cost and electricity prices?). Part B Assume you are in 1994. Construct the primary aluminum industry supply curve in 1994: you should produce the graphical supply curve and numerical supply curve in the Excel spreadsheet 1 . Bonus points will be given if the supply curve is graphed as a “step function” (see how to make a step function in Excel 2003 and Excel 2007). You should tell the client how you built the supply curve, being especially careful to state the assumptions and methodology. Clearly, label Excel worksheets 2 . Use the aluminum price figures from the case to predict primary aluminum production in 1994, which smelters ought to be idle, etc. As we did in the lectures, you may want to improve the model by recognizing that some primary smelters are irrational and construct a rational + irrational primary aluminum industry supply curve. Next, forecast primary aluminum prices, production and consumption for each of the next 5 years: that is for 1994, 1995, 1996, 1997, and 1998. You have much leeway here: try to come up with your own assumptions (i.e. don’t repeat the lecture calculations). You may be able to check the accuracy of your forecasts by comparing with these with actual prices, consumption and production figures. Assumptions and methodology should be clearly stated. 1 2 You should obviously explain to the client why you’re building the supply curve. You’re writing a professional report: for goodness sake, properly format graphs, put titles, axes, etc. Page 2 of 4 The Primary Aluminum Industry: 1994 & 2010 Pseudo‐case for ECO 204 2009 ‐ 2010 Business Report 2 U Toronto, Dept. of Economics, St. George Campus, ECO 204 2009‐2010 This case is copyright material and may not be used for commercial purposes without prior permission Part C Now summarize the aluminum industry, primary aluminum technology, and primary aluminum smelters in 2010. As before, you can use resources such as the US Geological Survey Minerals Information and International Aluminum Institute to describe and summarize the industry and smelters. For example, you can give a map of US primary aluminum smelters, and discuss whether the industry is in a boom or bust cycle (see current and projected production and capacity figures), etc. Part D You can assume that no smelter has exited or entered since 1994 and given current spot prices (see London Metal Exchange or the Wall Street Journal) predict which 1994 smelters should be operating or idle. Next you can try to extend and modify the 1994 industry supply curve to 2010. For example: • You may be able to find out which smelters in the 1994 data set have been idled or shut down and/or new smelters that have entered. See for example these two articles from Bloomberg and USGS), figures from here and/or here, this list of primary smelters in 1998, etc. You can extend and modify the supply curve by using or current and projected production and capacity figures in conjunction with current spot prices. Guidelines Please read and follow these guidelines. If you have any questions about the submission guidelines, please contact Asad Priyo in person (office hours: Tue 2 – 3:30 in Economics Dept. Room 213). • • • You can work in groups of 4 (i.e. maximum of 4 students per paper). You must submit a paper and Excel spreadsheet containing all calculations, graphs, models, etc. Each group must submit one hard copy of the paper and the excel spreadsheet on a CD on Friday April 2nd at: 10 am – 12 pm in Room GE 213 2 pm – 4 pm in Room GE 72 To reiterate: one hard copy and CD per group. Needless to say, please attach the paper and the CD with a solid clip. Each group member must also individually submit the paper and the Excel spreadsheet through the Assignment Tab in ECO 204 Black Board (i.e. 4 separate submissions of the same paper and Excel spreadsheet). The deadline for submission through Blackboard is 8:00 am, Friday, April 2nd. If by 7:45 am you are unable to submit the paper and Excel spreadsheet through the Assignment Tab, then please submit these through the digital drop box between 7:45 am and 8:00 am. Page 3 of 4 The Primary Aluminum Industry: 1994 & 2010 Pseudo‐case for ECO 204 2009 ‐ 2010 Business Report 2 • • U Toronto, Dept. of Economics, St. George Campus, ECO 204 2009‐2010 This case is copyright material and may not be used for commercial purposes without prior permission • • • • • • • Please note: you must first attempt to submit through the Assignment Tab (we will know if you made an attempt) and only if you are unsuccessful can you submit through the digital drop box between 7:45 am – 8:00 am on Friday, April 2nd. Submissions through the digital drop box before 7:45 am and/or after 8:00 am will be penalized. Please have a backup copy of the paper and Excel spreadsheet. Your paper and Excel spreadsheet may be submitted to the Economics IT administrator for analysis (such as whether portions of the paper and Excel spreadsheet were copied from other sources). The paper must be at most 17 pages (excluding Title page and bibliography). The paper title page and Excel CD must have the First_Last Names of all group members in alphabetical order. For example, if the group consists of Ajax Zebra, Cindy Tong, and Danny Boy, the names will be listed as: Danny Boy Cindy Tong Ajax Zebra Do NOT put ID numbers on the hard copy of the paper and the Excel CD. Electronic submissions must name files as: Firstname_Lastname.xxx(x) where “xxx(x)” is docx, doc, or pdf (for the paper) and xlsx or xls for the Excel spreadsheet. Please remember this is supposed to be a professional business paper. Here are some things you should keep in mind: o Empathize with reader: look at the paper from the reader’s perspective. Will it make sense? Does the paper flow nicely? Try to guide the reader through the paper: don’t just state results. o Check spelling. o Format properly. For instance: put page numbers, ensure tables and charts are not split across pages, create graphs and charts with proper titles, axes labels, etc. o Label Excel worksheets. For example, the worksheet used to create the 1994 supply curve should be labeled “1994 Supply Curve”. o Source all material. If you have used a resource from the internet, create a live link. For example, if I wanted to create a link to cnn.com I would type cnn.com, highlight cnn.com, do Ctrl K, type http://www.cnn.com and get cnn.com). o You are urged to make use of the University of Toronto Writing Centers. You are reminded that while it is OK to discuss the paper with others, the paper must be your own. It is NOT OK to copy charts, text, etc. from someone else and paste these in your paper. If you have any doubts, please see University of Toronto’s Code of Behaviour on Academic Matters. Severe penalties will be meted out to violators. Page 4 of 4 The Primary Aluminum Industry: 1994 & 2010 Pseudo‐case for ECO 204 2009 ‐ 2010 Business Report 2 ...
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