Aluminum

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Two articles in Reuters this week support observations we have made in posts this month and paint an encouraging picture for aluminum consumers, if not for producers, facing the first half of this decade.

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Rio Tinto recently released its Q1 production results, a quarter in which the coronavirus outbreak overwhelmed health systems, disrupted supply chains and led to downward revisions of economic growth forecasts.

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Even so, Rio Tinto’s production levels, while down compared with Q4 2019, were up on a year-over-year basis (i.e., compared with Q1 2019).

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals coverage here on MetalMiner, including coverage of: U.S. housing starts; aluminum mills taking steps to make their operations more green; iron ore prices; and the European steel sector.

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Despite a plunging LME price and dire short-term prospects for metal consumption in Europe and the U.S., aluminum mills are still following through on long-term plans to improve their environmental credentials.

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They are doing this, particularly, to lower the carbon content of their products to meet buyers’ increasing focus on such environmental considerations.

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This morning in metals news, the U.S. deficit fell in January, aluminum prices ticked up slightly this week and the CEO of the American Iron and Steel Institute is retiring.

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According to the U.S. Federal Reserve’s latest report on industrial production, industrial production in December dipped 0.3%.

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Industrial capacity utilization dipped by 0.4 percentage point to 77.0%, which is down from the long-run average — from 1972-2018 — of 79.8%

Utilities fell 5.6% on the month, down to an index reading of 101.6% (with a reading of 100% equivalent to production in 2012) — marking its first decline since August.

“The drop for utilities resulted from a large decrease in demand for heating, as unseasonably warm weather in December followed unseasonably cold weather in November,” the Fed said.

Manufacturing ticks up in December

However, manufacturing production was up 0.2% (after rising 1.0% in November), while mining increased 1.3% after posting declines in four of the previous five months (including a 0.2% drop in November).

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This morning in metals news, aluminum maker Alcoa released its financial results for Q4 and 2019, an Ohio steel plant touts investment that it says will bring new jobs and a Pittsburgh-based metals manufacturer says it will have to close a facility unless it wins a steel tariff exemption.

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Alcoa releases quarterly financials

Aluminum maker Alcoa reported a net loss of $303 million ($57 million excluding special items) in Q4 2019.

Fourth-quarter revenue came in at $2.4 billion, down from $2.6 billion the previous quarter and $3.3 billion in Q4 2018.

“In 2019, we acted to further strengthen Alcoa, completing the divestiture of uncompetitive assets, modernizing labor agreements in three countries, implementing a new operating model, and making quick progress on the asset review process we announced last quarter,” Alcoa President and CEO Roy Harvey said.

“While the market in alumina and aluminum challenged us, we maintained a strong cash balance of nearly $900 million and drove operational stability,” Harvey said. “Also, our low-cost, top-tier bauxite and alumina segments both set new annual production records based on our current portfolio.”

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The Aluminum Monthly Metals Index (MMI) bounced off last month’s three-year low with a three-point increase to 86. All prices in the index increased by more than 3%.

LME aluminum prices increased in December and surpassed $1,830/mt in early January.

Source: MetalMiner analysis of London Metal Exchange (LME) and FastMarkets

Now analysts are watching to see if lackluster demand will allow recent increases to stick.

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According to recent data from the International Aluminum Institute, global aluminum production in November totaled 5.19 million tons, down from 5.35 million tons the previous month.

Buying Aluminum in 2019? Download MetalMiner’s free annual price outlook

Production in November was also down on a year-over-year basis compared with 5.33 million tons produced in November 2018.

China’s production drops

No. 1 producer China churned out an estimated 2.88 million tons in November, down from 2.98 million tons in October and 3.04 million tons in November 2018.

Around the world

Elsewhere, production from Gulf Cooperation Council (GCC) countries totaled 481,000 tons, down from 494,000 tons the previous month and up from the 432,000 tons produced in November 2018.

Production in east and central Europe totaled 345,000 tons in November, down from 356,000 tons in October and 332,000 tons in November 2018.

Meanwhile, in western Europe, production totaled 282,000 tons in November, down from 286,000 tons the previous month and the 310,000 ton produced in November 2018.

North American production totaled 311,000 tons in November, down from 316,000 tons in October and 318,000 tons in November 2018.

Alumina production

As for alumina production, global output reached 10.92 million tons in November.

China’s aluminum production totaled 5.78 million tons in November.

In other alumina news, Norsk Hydro said power outages impacted its operations at Paragominas and Alunorte (its Brazilian alumina refinery). The firm said a transmission tower overturned Dec. 18, causing the outages.

As a result, production at Alunorte was temporarily reduced to 50-70% “to prolong the lifetime of the bauxite inventories.”

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Aluminum price

The LME aluminum price reached $1,1816/mt as of late last week, up 4.22% from the previous month, according to MetalMiner IndX data.

(To revisit 2019 in aluminum news, check out our most-viewed aluminum-centric posts of the previous year.)

Norsk Hydro’s Alunorte refinery. Source: Norsk Hydro

Continuing our look back at some of the most-viewed posts of the year on MetalMiner, today we’ll take a look at some of the most popular aluminum-centric posts of the year.

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We already reviewed the top steel posts of the year.

Below are the top 10 most-viewed aluminum-centric posts here on MetalMiner this year:

  1. Trump Drops Metals Tariffs on Canada, Mexico; What’s the Impact on Steel, Aluminum Prices?

  2. Aluminum is in Deficit, but Prices Don’t Reflect Any Shortage

  3. Aluminum MMI: Aluminum Prices Fall Despite Global Supply Deficit

  4. Aluminum MMI: Aluminum Prices Decline While Monthly Index Gains 2.3%

  5. Aluminum MMI: Tight Aluminum Supplies Stave Off Further Price Drops For Now

  6. Alunorte’s Restart Does Not Bode Well for Aluminum Prices

  7. Aluminum Market is in Balance – For Now

  8. Aluminum Prices Rising Despite Weak Demand

  9. Aluminum Dissonance: Why Have Prices Softened Despite Supply Deficit?

  10. Aluminum MMI: Falling Chinese Prices Offset by Strong Prices in ROW