In his president’s speech at the Alfed annual dinner on Wednesday, Mr Davies said the recovery looked like continuing into 2011.

The aluminium price on the LME is up while manufacturers have reported stronger activity and healthier order books in October.

In the key market sectors of packaging, transport, building and architecture, and general engineering, the industry was ‘rising to the challenge’. He cited the aerospace sector as an example, with Airbus and Boeing having long order backlog positions for their aircraft programmes. The same, albeit to lesser extent, is also true of regional jet manufactures such as Embraer and Bombardier.

But Mr Davies warned the federation could not escape from the fact that there had been major closures in the UK in the past two years.

The industry is facing major environmental and legislative challenges through the Climate Change Agreement/Climate Change Levy and the European Union’s Emissions Trading Scheme. The industry is at significant risk of carbon leakage, and without government support and compensation, a serious threat was posed to primary production in the UK.

Global production is reaching record levels, with China and the Middle East recording major growth. Competitiveness, energy prices and energy supply and the urgent need for a level playing field, are all top of the agenda of key issues, he added.

About 170 people attended the event held at the Merchant Taylors’ Hall in London, where business expert Lord Digby Jones was guest speaker.

The full text of Mr Davies’ speech is available to view as a PDF download here: