UC RUSAL expects Global aluminium demand to increase by 5.4% YoY in 2016

Russian Aluminium major UC RUSAL announces its results for the 2nd Quarter and 1st Half ended 30 June 2016. Along with reporting the financial results, the company also reports global aluminium market trends for H12016 and its forecast for the rest of the year.
 
Highlights for the first half of 2016

• Global aluminium demand grew by 5.4% YoY as a result of strong demand in China, Europe, other Asia, North America and India.
• Global aluminium demand will increase by 5.4% YoY to 59.5 million tonnes in 2016, driven by ex-China growth of 3.5% to 28.5 million tonnes and China growth of 7.2% to 31.0 million tonnes.
• World Primary aluminium production ex-China rose by 1.5% YoY to 13.3 million tonnes. Though there was production ramp up in India and Malaysia it was offset by capacity cuts in the U.S.
• China’s aluminium production increased 1.1% YoY to 15.4 million tonnes due to restricted capacity expansion.
• China’s exports of aluminium semis fell 9.1% YoY to 2.02 million tonnes in 1H 2016 as compared to 2.2 million tonnes at the same period of 2015.
• RUSAL forecasts a deficit of approximately 1 million tonnes in 2016 for the global aluminium market.
 


Aluminium demand
 
Primary aluminium consumption increased 7.4% in 1H 2016 YoY to 14.9 million tonnes.
Global demand ex-China amounted to 14.2 million tonnes .

US demand was driven by automotive and housing sector. In Europe, the economy continues to improve. For Europe as a whole, Construction and transportation drove the primary aluminium demand growth of 3.3%.

The Japanese demand was driven by transportation and beverage packaging sectors. South Korea’s Aluminium demand growth is running firm as a benefit from the strength of auto body sheet shipments. In ASEAN countries, the automotive market shows a positive pace. The Indian growth story continues with aluminium demand rising by 8.4% in the first half of 2016.

Aluminium supply

Primary aluminium production in the world ex- China rose by 1.5% YoY to 13.3 million tonnes.( IAI and CRU data)

The main growth in Asia was due to the ramping-up production in India and in Malaysia, while the largest production decline was in North America due to smelter closure.
 
China’s aluminium production rose only 1.1% YoY to 15.4 million tonnes, as Chinese aluminium smelters restricted production since the the end of 2015. During 1H 2016, Chinese installed aluminium capacity rose by only 1.5 million tonnes per year.

China continued to export large amount of aluminium semis thus putting downward pressure on the primary aluminium balance worldwide along with the LME aluminium price. However, the pressure significantly decreased during 1H 2016, as China’s exports of aluminium semis fell 9.1% YoY to 2.020 million tonnes in January – June.

RUSAL estimates that the global aluminium market will show a deficit of around 1 million tonnes in 2016 as a result of strong aluminium demand growth, increase in the global aluminium supply and falling Chinese aluminium semis exports.