The SHFE aluminum cash price has continued to move higher, supported by fresh signs of easing tensions between the US and China. US President Donald Trump has agreed to delay additional tariffs on $250 billion worth of Chinese goods for two more weeks. The news from the US lifted the SHFE aluminum cash price to a settlement of RMB 14,530 /t on 12 September, the highest settlement for the contract since September 2018. Movement across LME aluminum prices was comparatively more subdued. The LME three-month contract settled at $1,823 /t on 11 September and prices have subsequently drifted below $1,820 /t during trading on the morning of 12 September.
Q2 2019 was a difficult quarter for most of the large extrusion companies, with several seeing declines in EBITDA. Weakening demand in China and concerns over the US and European economies have loomed large over Q2, with shipments dropping y/y for most of the companies. On the other hand, major rollers capitalized on heavy aerospace and automotive product mixes while enjoying favorable metal spreads and high scrap availability. Weak demand growth in Asian markets bled into Europe during Q2, which had been a bright spot for rollers a quarter prior. Conversely, strong demand persisted in the US markets and supported aluminum roller EBITDA growth.
Despite lower aluminum prices in Q2 2019, primary aluminum producers have started to reverse the downward trend in results by posting the first quarterly EBITDA per tonne increase since Q3 2018. Most of the aluminum producers that posted losses in Q1 2019 have now either reverted to profit or are close to break-even. The results still show a challenging environment for producers, however it seems that many have reached a bottom as raw material prices are trending lower, which should translate into lower costs in the next quarters. Concerns regarding slowing global economic growth and aluminum consumption were raised by major producers, highlighting the challenges arising from increasingly protectionist global trade environment and the weakening automotive market.
Aluminum Highlights
Week Ending: September 13, 2019An update on industry activity and economic indicators
Market ViewBy: Doug Hilderhoff, Principal Analyst, Head, CRU North American Aluminum
The views expressed in the “Market View” are those of the author and do not necessarily represent the views of the Aluminum Assoc iation
September 10 – The Association’s “Index of Net New Orders of Aluminum Mill Products” for August 2019 rose 5.5 percent over July 2019. Orders for flat roll products (sheet, plate, can stock and foil) increased 8.2 percent over the previous month, while orders for extruded products were down 4.8 percent and orders for redraw rod were up 7.2 percent. Compared to August 2018, total orders decreased 7.8 percent. On average, orders recorded by domestic producers through August 2019 were down 7.2 percent from year-to-date 2018.
September 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 3,949,088 tonnes during August 2019, declining 10,797 tpy (-0.3%) from the July 2019 rate of 3,959,885 tonnes. The production rate in both the U.S. and Canada fell three-tenths of one percent m/m. Compared to a year ago, the North American annual rate was 6.2 percent above the August 2018 rate of 3,820,267 tonnes. Actual production in August 2019 totaled 335,402 tonnes.
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North America Primary Aluminum Production(Annual Rate in Thousands of Metric Tons)
The Aluminum Association & Aluminum Association of Canada Not Seasonally Adjusted
US 12-mo.
Can. 12-mo.
September 10 – Aluminum imports of ingot, scrap and mill products into the U.S. and Canada (excluding cross-border trade) totaled 860 million pounds in July 2019, an increase of 15.6 percent over the July 2018 total of 744 million pounds. Including scrap, which accounted for roughly 57.2 percent of reported aluminum exports in July, exports totaled 617 million pounds, rising 5.6 percent over a year ago. Excluding scrap, exports totaled 264 million pounds, off 4.2 percent from last year. Exports of scrap increased 14.4 percent year-over-year. Through the first seven months of 2019, imports increased 1.5 percent to 5,679 million pounds, while exports were up 6.7 percent to 4,352 million pounds.
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Foreign Trade - U.S. and Canada(Millions of Pounds)
Not Seasonally AdjustedU.S. Bureau of the Census and Statistics Canada
September 13 – Estimated net shipments of Aluminum Sheet and Plate by U.S. and Canadian producers totaled 754.4 million pounds during August 2019, a decrease of 3.5 percent from the August 2018 total of 782.0 million pounds. Compared to the previous month, net shipments increased 5.9 percent over the July 2019 total of 712.6 million pounds. Year-to-date net shipments through August 2019 totaled 5,898.0 million pounds, off eight-tenths of one percent from the 2018 year-to-date total of 5,948.2 million pounds.
Shipments of Can Stock totaled 319.5 million pounds during August 2019, down 5.6 percent from the August 2018 total of 338.5 million pounds, while shipments of Non-heat Treatable Sheet (excluding Can Stock) decreased 6.3 percent to 249.3 million pounds and shipments of All Other Sheet and Platerose 4.7 percent to 185.7 million pounds..
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sheet and Plate Shipments
2018 2019*
The Aluminum Association Not Seasonally Adjusted
Millions of Pounds
September 13 – Shipments of Aluminum Foil by U.S. and Canadian producers totaled 76.5 million pounds during August 2019, a decrease of 13.3 percent from the August 2018 total of 88.2 million pounds. Compared to the previous month, shipments declined 1.9 percent from the July 2019 total of 77.9 million pounds. Year-to-date shipments through August 2019 totaled 626.5 million pounds, off 5.3 percent from the 2018 year-to-date total of 661.5 million pounds.20
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Foil Shipments
2018 2019*
The Aluminum Association Not Seasonally Adjusted
Millions of Pounds
The Aluminum Association Not Seasonally Adjusted
Millions of Pounds
September 12 – Shipments of can stock by domestic producers totaled 319.5 million pounds during August 2019, a decrease of 5.6 percent from the August 2018 total of 338.5 million pounds. Compared to the previous month, shipments rose 1.4 percent over the July 2019 total of 315.1 million pounds. Year-to-date shipments through August 2019 totaled 2,498.9 million pounds, off 7.8 percent from the year-to-date 2018 total of 2,710.5 million pounds.
Compared to August 2018, producer shipments of can stock to U.S. markets declined eight-tenths of one percent to 295.7 million pounds, while exports dropped 41.1 percent to 23.9 million pounds.
September 11 – The Producer Price Index for final demand (which includes goods and services) rose one-tenth of one percent in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported. Final demand prices increased two-tenths of one percent in July and one-tenth of one percent in June. The index for final demand goods fell five-tenths of one percent, while final demand goods less food and energy was essentially unchanged m/m. On an unadjusted basis, the final demand index increased 1.8 percent for the 12 months ended in August.
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1.5%Monthly Change in Selected PPI Indexes
Final Demand
Final Demand Goods
Bureau of Labor StatisticsSeasonally Adjusted
September 10 – Canadian housing starts increased 1.9 percent in August m/m, at a seasonally adjusted annual rate (SAAR) of 226,639 units according to the Canadian Mortgage and Housing Corporation (CMHC). This followed a decrease of 9.1 percent in July (revised). The six-month moving average (218,998) advanced for the fourth time in the last five months. The SAAR of urban starts increased to 213,663 in August, 2.0 percent above the July rate. Multiple urban starts fell 1.4 percent (160,388 units), while the single-detached urban starts segment advanced 13.6 percent to 53,275 units m/m.
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Canada Housing Starts(thousands of units)
Housing Starts 6-mo Trend
Canada Mortgage and Housing Corporation Seasonally Adjusted Annual Rate
September 10 – The total number of job openingswas little changed at 7.2 million on the last business day of July, according to the U.S. Bureau of Labor Statistics. Manufacturing job openings increased 1.4 percent over June, and increased 7.0 percent over a year ago. Hires in the manufacturing sector rose 2.7 percent over the previous month, but were off 12.2 percent from the level reached a year ago. The spread between hires and separations in manufacturing remained in positive territoty at 20 thousand, as July hires were an estimated 345 thousand, while separations totaled 325 thousand (-1.8% m/m).
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SOURCE: U.S. BUREAU OF LABOR STATISTICS/FRED
U.S. Manufacturing Job Openings and Labor Turnover
September 12 – The U.S. Bureau of Labor Statistics reported that in the week ending September 7, the advance figure for seasonally adjusted initial claimswas 204,000, a decrease of 15,000 from the previous week's revised level. The 4-week moving average was 212,500, a decrease of 4,250 from the previous week's revised average.
An initial claim is a claim filed by an unemployed individual after a separation from an employer.
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Source: US. Employment and Training Administration/FRED
Unemployment Insurance Initial Claims(Thousands)
Last 52 Weeks
September 12 – The U.S. Consumer Price Index for All Urban Consumers (CPI-U) increased one-tenth of one percent in August on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported. This followed the previous month's reading in which the index increased three-tenths of one percent m/m. The core consumer price index (all items less food and energy) rose three-tenths of one percent (rounded) for the third consecutive month. Over the last 12 months, the all items index rose 1.8 percent, while the core price index has increased 2.4 percent over the same period.
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U.S. Consumer Price IndexAll Urban Consumers (CPI-U)
Crude Oil Near-Month Futures (WTI & Brent)(U.S. dollars per barrel)
Brent
WTI
CME Group Inc.
September 13 – On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $54.85/bbl on Friday, September 13, down $1.67 (-3.0%) from last week's close of $56.52/bbl. Crude oil prices finished lower on Friday, with both U.S. and international benchmark crude posting sizable weekly falls as worries about the prospect of rising inventoriesappeared to overshadow a U.S.-China tariff detente. Active U.S. oil-drilling rigs fell by 5 to 733, the tenth weekly decline in the last eleven weeks. Compared to last year, oil rigs have contracted by 134. Brent Crude on London's ICE Futures exchange closed the week off at $60.22/bbl (-2.1%). Friday's spread between the two was $5.37/bbl, up from last week's spread of $5.02/bbl.
September 12 – The U.S. Energy Information Administration (EIA) reported that natural gas spot prices rose at most locations this report week (Wednesday, September 4 to Wednesday, September 11). Henry Hub spot prices rose from $2.42 per million British thermal units (MMBtu) last Wednesday to $2.59/MMBtu.
At the New York Mercantile Exchange (Nymex), the price of the October 2019 contract increased 11¢, from $2.445/MMBtu last Wednesday to $2.552/MMBtu. The price of the 12-month strip averaging October 2019 through September 2020 futures contracts climbed 9¢/MMBtu to $2.561/MMBtu .
September 6 – According to the most recent release by the Federal Reserve Board, the Nominal Broad Dollar Index closed the week at 130.55 on Friday, September 6h, a decrease of nine-tenths of one percent from the previous week's close of 131.68. The result is the first weekly decline in the Index in the last two months. Despite the drop, the Index continued its run of surpassing its 30 day-moving average for the seventh consecutive week. Over the last six months, the Index has advanced 2.2 percent, while it's up 3.1 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.
8The 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)
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)
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