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Aluminum Highlights

Week Ending: May 12, 2017An update on industry activity and economic indicators

Market ViewBy: Mike Southwood, Senior Consultant – CRU Price Risk Management

The views expressed in the “Market View” are those of the author and do not necessarily represent the views of the Aluminum Association

The North American aluminum market has been in an optimistic mood lately amid growth in most key sectors. North American rolled products and extrusion demand in Q1 2017 was spurred on by a healthy building and construction (B&C) market, continued strength from the auto sector, and strong distributor demand. In the building and construction (B&C) sector, market players experienced a solid first quarter of the year. Despite a drop in sales recently, auto production has risen, and sheet makers continue to report strong demand.

However, trade cases still loom large in the market. On 21 April, the United States International Trade Commission (USITC) determined that there is a reasonable indication that the US industry is materially injured by reason of imports of aluminum foil from China are allegedly subsidized and sold in the US at less than fair value. As a result of the unanimous decision to pursue the case, the U.S Department of Commerce (DoC) will continue to conduct its antidumping (AD) and countervailing duty investigations (CVD), with its preliminary CVD determination due on 2 June, and its preliminary AD determination due on 16 August.

In addition, results of the first sunset reviews of AD and CVD orders on aluminium extrusions from China by the DoC and the USITC were released. After review, it was determined by both the ITC and DoC that the removal of AD and CVD on imports of Chinese aluminium extrusions would likely result in the resumption of dumping and/or subsidies which would be of harm to the domestic industry. As such, the AD and CVD orders were continued.

Also, in late April, the Trump Administration launched a Section 232 investigation, to determine whether aluminum imports pose a threat to national security. There is concern the US might be unable to secure enough domestic aluminum to meet its needs. The President has the ability to impose any amount of tariffs, or even ban imports entirely of a material, if the Commerce Department returns to him a finding that imports of that material pose a national security threat.

As CRU stated at the Aluminum Association’s Spring Meeting, it is very early in the process to judge exactly what trade policies will be proposed by the new Administration, which policies will be enacted by the Congress, and the actual timing of such implementation. However, this is a critical topic to the aluminum industry, with profound consequences all the way through the industry should any such changes be enacted.

The Aluminum Association

2Industry Activity

May 9 – Aluminum imports of ingot, scrap and mill products into the U.S. and Canada (excluding cross-border trade) totaled 898 million pounds in March 2017, up 26.9 percent over the March 2016 total of 708 million pounds. Including scrap, which accounted for roughly 56.1 percent of reported aluminum exports in March, exports totaled 544 million pounds, up 10.5 percent over a year ago. Excluding scrap, exports totaled 239 million pounds, down 10.0 percent from last year. Exports of scrap increased 34.5 percent year-over-year. Through the first quarter 2017, imports were up 40.6 percent to 2,518 million pounds, while exports were up 3.8 percent over a year ago to 1,488 million pounds.

May 9 – The Association’s “Index of Net New Orders of Aluminum Mill Products” for April decreased 8.8 percent from the previous month. Orders for flat roll products (sheet, plate, can stock and foil) were down 7.3 percent, while orders for extruded products decreased 15.8 percent and orders for redraw rod were off 2.8 percent. Compared to April 2016, orders decreased 2.2 percent. On average, orders recorded by domestic producers through the first four months of 2017 were up 1.9 percent over last year.

May 10 – The Aluminum Association, in cooperation with the Aluminium Association of Canada, reported primary aluminum production in North America (U.S. and Canada) was at an annual rate of 3,965,579 tonnes during April 2017, down 11,897 tpy (-0.3%) from the March 2017 rate of 3,977,476 tonnes. The production rate in the U.S. decreased 1.3 percent m/m, while the Canadian rate was off one-tenth of one percent. Compared to a year ago, the North American annual rate was 1.1 percent below the April 2016 rate of 4,009,042 tonnes. Actual production through the first four months of 2017 totaled 1,304,909 tonnes, down 4.7 percent from a year ago.

May 12, 2017

This report is based on information reported to the Association by participants, which is aggregated by the Association. While the Association believes that its statistical procedures and methods are reliable, it does not warrant the accuracy or completeness of the data. All data contained herein are subject to revision. For further information, contact Ryan Olsen, V.P. Business Information and Statistics at 1-703-358-2984 or email rolsen@aluminum.org. © The Aluminum Association, Inc. All rights reserved.

The Aluminum Association

3Industry Activity Continued…

May 12 – Shipments of Aluminum Foil by U.S. and Canadian producers totaled 80.0 million pounds during April 2017, a decrease of 5.3 percent from the April 2016 total of 84.4 million pounds. Compared to the previous month, shipments were down 6.1 percent from the March 2017 total of 85.2 million pounds. Year-to-date shipments through April 2017 totaled 313.2 million pounds, off 5.0 percent from the 2016 year-to-date total of 329.6 million pounds.

May 12 – Shipments of can stock by domestic producers totaled 320.9 million pounds during April 2017, off 7.8 percent from the April 2016 total of 348.1 million pounds. Compared to the previous month, shipments decreased 11.5 percent from the March 2017 revised total of 362.5 million pounds. Year-to-date shipments through April 2017 totaled 1,354.5 million pounds, down 2.4 percent from the 2016 year-to-date total of 1,387.6 million pounds.

Compared to April 2016, producer shipments of can stock to U.S. markets were off 3.7 percent to 280.3 million pounds, while exports decreased 29.1 percent to 40.5 million pounds.

May 12 – Estimated net shipments of Aluminum Sheet and Plate by U.S. and Canadian producers 698.9 million pounds during April 2017, off nine-tenths of one percent from the April 2016 total of 705.4 million pounds. Compared to the previous month, shipments decreased 7.3 percent from the March 2017 revised total of 754.3 million pounds. Year-to-date shipments through April 2017 totaled 2,832.8 million pounds, up 1.6 percent over the 2016 year-to-date total of 2,787.2 million pounds.

Shipments of Can Stock totaled 320.9 million pounds during April 2017, down 7.8 percent from the April 2016 total of 348.1 million pounds, while shipments of Non-heat Treatable Sheet (excluding Can Stock) rose 4.7 percent to 249.2 million pounds and shipments of All Other Sheet and Plate increased 8.1 percent to 128.9 million pounds.

May 12, 2017

The Aluminum Association

4Economic Activity

May 9 – The total number of job openings in the U.S. was little changed at 5.7 million seasonally adjusted, on the last business day of March according to the U.S. Bureau of Labor Statistics. Manufacturing job openings reached 394 thousand, up 8.2 percent over February, and up 15.2 percent over a year ago. Hires in the manufacturing sector increased 8.8 percent, out pacing separations for the second consecutive month (+4 thousand). In March, hires totaled 322 thousand while separations totaled 318 thousand (+13.6%).

May 8 – Canadian housing starts decreased 15.1 percent in April, to a seasonally adjusted annual rate (SAAR) of 214,098 units according to the Canadian Mortgage and Housing Corporation (CMHC). This followed an increase of 18.6 percent in March. The six-month moving average (213,769) increased for the fourth consecutive month. The SAAR of urban starts fell to 199,485 inApril, 15.1 percent below the March rate. Multiple urban starts were down 16.7 percent to 134,314 units, while the single-detached urban starts segment decreased to 65,171 units (-12.1%).

May 11 – The Producer Price Index for final demand (which includes goods and services) increased five-tenths of one percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported. Final demand prices were off one-tenth of one percent in March and up five-tenths of one percent in February. The index for final demand goods also increased five-tenths of one percent and final demand goods less foods and energy increased three-tenths of one percent m/m. On an unadjusted basis, the final demand index increased 2.5 percent for the 12 months ended in April.

May 12, 2017

The Aluminum Association

5Economic Activity Continued…

May 12, 2017

May 12 – The U.S. Consumer Price Index for All Urban Consumers (CPI-U) increased two-tenths of one percent in April on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported.This followed the previous month's reading in which the index was off three-tenths of one percent m/m. The core consumer prices (index for all items less food and energy) rose one-tenthof one percent, after a decrease of one-tenth of one percent the prior month. Over the last 12 months, the all items index rose 2.2 percent, while the core price index has increased 1.9 percent over the same period.

The Aluminum Association

6Energy

May 12 – According to this week's release by the Federal Reserve Board, the Nominal Broad Dollar Index closed the week at 124.36 on Friday, up one-tenth of one percent from the previous week's close of 124.44. Despite the slight increase, the Index has remained essentially flat over the last three weeks. Over the last six months, the index is up one-tenth of one percent, while it's up 3.5 percent over the last 12 months.

The nominal broad dollar index is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a broad group of major U.S. trading partners.

May 12 – On the NYMEX, near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $47.84/bbl on Friday, May 12, up $1.62 (+3.5%) from last week's close of $46.22/bbl. Oil futures notched the first weekly gain in a month on expectations OPEC will extend their agreement to curb production past the end of the year, and suggested deeper production cutsmay also be on the cards. Active U.S. oil-drilling rigs increased by 9 this week to 712, it's 17th weekly increase in a row. Compared to last year, oil rigs have increased by 394. Brent Crude on London's ICE Futures exchange closed the week up at $50.84/bbl (+3.5%). Friday's spread between the two was $3.00/bbl, up from last week's spread of $2.88/bbl.

May 11 – The U.S. Energy Information Administration reported that natural gas spot prices rose at most locations this report week (Wednesday, May 3 to Wednesday, May 10). The Henry Hub spot price rose from $3.09 per million British thermal units (MMBtu) last Wednesday to $3.11/MMBtu. At the New York Mercantile Exchange (Nymex), the June 2017 contract price rose 6¢ from $3.228/MMBtu last Wednesday to $3.292/MMBtu.

U.S. Dollar

May 12, 2017

The Aluminum Association

7The Aluminum Association, founded in 1933, works globally to aggressively promote aluminum as the most sustainable and recyclable automotive, packaging and construction material in today’s market. The Association represents North America and foreign-based primary producers of aluminum, aluminum recyclers, producers of semi-fabricated products and foundries as well as suppliers to the industry or distributors or jobbers.

The Aluminum Association's statistical programs provide industry information on primary aluminum production, new orders of mill products, industry shipments, end use market estimates, inventories, recycling and foreign trade on a monthly, quarterly and annual basis. Special surveys provide data on specific subjects such as primary capacity, flat roll capacity, inventories and castings shipments. Custom reports are available on a for-fee basis. Web briefings are also available upon request.

Industry OverviewAluminum Statistical Review (Annual Fact Book)Aluminum Highlights (Weekly)Aluminum Situation (Monthly)Summary of Producer Shipments and Inventories (Monthly)

Primary AluminumPrimary Aluminum Production – U.S. and Canada (Monthly)Primary Installed Capacity (Annual)Shipments of Primary Aluminum by Form (Quarterly)

Mill ProductsIndex of Net New Order Receipts for Aluminum Mill Products (Monthly)Can Stock Shipments (Monthly)Electrical Conductor Shipments (Monthly)Extruded Products Shipments and Press Utilization (Monthly)Flat Roll Capacity (Annual)Foil Shipments (Monthly)Forging and Impacts Shipments (Monthly)Rod, Bar, and Wire Shipments (Monthly)Sheet and Plate Shipments (Monthly)

End UseExtrusion Shipments by End Use (Quarterly)Fin Stock Shipments by End Use (Quarterly)Foil Shipments by End Use (Monthly)Sheet and Plate Shipments by End Use (Quarterly)

CastingsU.S. Foundry Castings Shipments (Quarterly)Canada Foundry Castings Shipments (Annual)

RecyclingNew Can Stock (Class) Scrap Receipts (Monthly)Used Beverage Can Reclamation (Annual)

Foreign Trade (based on government customs data)Summary of U.S., Canada and Mexico Imports and Exports (by Commodity), MonthlyForeign Trade Online Database - U.S., Canada and Mexico Exports & Imports of Aluminum (By Commodity, by Country)

For a complete list of statistical publications and reports visit our bookstore.

May 12, 2017