Rusal reviews trends in the global aluminium industry

Rusal, the largest aluminium producer in the world makes observations in the global aluminium demand and supply in the current year, making note of the strongest players in the industry during the period.

The global aluminium demand

During the first nine months of 2014, global primary aluminium consumption reached 41 million tonnes, representing a 7% increase as compared the corresponding period of 2013. The fastest growing markets during the period were China (12%), Japan, and South Korea (6%). North America experienced a 4.3% increase in growth whereas consumption grew strongly in Europe by 3.7%

year-on-year. Global Manufacturing PMI for September stayed flat at 52.2 slightly lower than 52.5 in August. The global PMI continues to signal 3-4% annualized gains in global manufacturing output due to strong growth in North America and China and a fast recovery throughout Europe and maintaining a strong driver of commodity demand. According to UC RUSAL forecasts, the aluminium market ex-China experienced a market deficit of 0.9 million tonnes due to stronger than anticipated aluminium consumption and production curtailments during the first nine months of 2014.

The global aluminium supply

According to IAI and CRU data, global aluminium production ex-China fell by 182,000 tonnes during the first nine months of 2014 versus the same period of last year. Despite new capacity commissioned in the Middle East and Asia, more than 1.3 million tonnes of ex-China capacity was closed during the first nine months of 2014 and another 0.4 million tonnes is still under threat of potential closure by the year end. As expected, higher prices will not incentivise marginal producers to significantly restart capacity in the coming years.

Chinese net operating capacity increased by 1.86 million tonnes to 29 million tonnes during the first nine months of the year due to the commissioning of new capacity and recommencement in specific provinces throughout China. However, around 1.8 million tonnes of operating capacity remains idle. Total aluminum production in China for the first nine months of 2014 rose by 11.6% to 20.7 million tonnes.

Chinese official authorities continue to limit growth in new investments into aluminum industry as a measure to tackle with overcapacity. As a result according to China Nonferrous Metals Industry Association (CNIA) China`s fixed-asset Investments in alumina, primary aluminum and secondary aluminum (aluminum recycling) projects decreased by 33.9% year-on-year to RMB35.5 billion in the first eight months of 2014.

Another factor which may affect Chinese capacity growth for both aluminum and alumina is a possible imported material constraint in form of bauxite and alumina in 2015-2017.