market view - the aluminum association...2018/05/18 · an update on industry activity and economic...
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Aluminum Highlights
Week Ending: May 18, 2018An update on industry activity and economic indicators
Market View
The LME three-month aluminium was trading at $2,325/t in the morning of 17 May but decreased to $2,273/t following the re-warranting of roughly 140,000t of material at the Port Klang LME warehouse in Malaysia. At the time of writing the price stands at $2,299/t. The re-warranting has caused the LME aluminium cash-to-three-month backwardation to ease from $19/t to $10/t in trading at the end of the week.
The SHFE aluminium cash price crept higher from RMB14,515/t on 10 May to RMB14,795/t on 17 May, on support from declining stock levels in China. Reported Chinese stock levels declined from 2.13Mt on 11 May to 2.08Mt on 17 May.
The spot US Midwest premium held firm over the last week at 22.0¢/lb and remains in a range between 21.5¢/lband 22.5¢/lb. Scrap is readily available and with scrap spreads being so wide, mills are increasing scrap content to replace some P1020 requirements. The billet market continues to be impacted by the ongoing US sanctions against Russia and the supply cut-off at ABI and the billet premium is trading in a wide range between 14¢/lb and 19¢/lb. The market awaits the final determinations on Section 232 on 01 June and what decisions on exemptions and quotas are made.
In other developments, CRU understands that Chalco has publicly lobbied for the removal of the 15% export tariff on Chinese aluminium ingot during LME Week Asia. There is no indication that the government will remove the export tax as it would be a reversal of government policy that has viewed the export of primary metal as the equivalent of the export of electricity from the country. In China the market has moved into deficit during the seasonally stronger period for demand, and in Q2 CRU expects a deficit of around 500,000 tonnes, following a surplus of similar size in Q1.
By: Paul Williams, Head of Aluminium – CRU AnalysisThe views expressed in the “Market View” are those of the author and do not necessarily represent the views of the Aluminum Association
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The latest issue included topics such as:• Novelis Breaks Ground on New Facility: Member company
Novelis broke ground on a new $300 million automotive aluminum sheet manufacturing facility in Guthrie, Kentucky.
• Businesses Weigh in on Section 301 Tariffs and Section 232 Product Exclusions: Dozens of business leaders testified about the impact of the president's Section 301 tariffs over the course of three days of hearings…
• Elysis Tech is Potential Game-Changer: Chris Mooney of The Washington Post this week wrote an article saying last week's joint venture announcement from Rio Tinto and Alcoa could…
• NAFTA Negotiations Continue: House Speaker Paul Ryan’s May 17 deadline for the Trump administration to notify Congress of a new NAFTA deal is in the rear view with some progress…
The Aluminum Association
2Industry Activity
May 18, 2018
May 15 – Shipments of can stock by domestic producers totaled 326.5 million pounds during April 2018, up 1.3 percent over the April 2017 total of 322.3 million pounds. Compared to the previous month, shipments decreased 5.7 percent from the March 2018 revised total of 346.3 million pounds. Year-to-date shipments through April 2018 totaled 1,323.4 million pounds, off 2.4 percent from the 2017 year-to-date total of 1,355.9 million pounds.
Compared to April 2017, producer shipments of can stock to U.S. markets were rose 1.2 percent to 285.0 million pounds, while exports were up 2.3 percent to 41.5 million pounds.
200
250
300
350
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Can Stock Shipments
2017 2018*
The Aluminum Association Not Seasonally Adjusted
Millions of Pounds
May 16 – Shipments of Aluminum Foil by U.S. and Canadian producers totaled 81.7 million pounds during April 2018, up 2.1 percent over the April 2017 total of 80.0 million pounds. Compared to the previous month, shipments were off 1.4 percent from the March 2018 total of 82.8 million pounds. Year-to-date shipments through April 2018 totaled 314.7 million pounds, a rise of five-tenths of one percent over the 2017 year-to-date total of 313.2 million pounds. 20
30
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100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Foil Shipments
2017 2018*
The Aluminum Association Not Seasonally Adjusted
Millions of Pounds
The Aluminum Association Not Seasonally Adjusted
Millions of Pounds
May 16 – Estimated net shipments of Aluminum Sheet and Plate by U.S. and Canadian producers totaled 731.7 million pounds during April 2018, up 4.6 percent over the April 2017 total of 699.5 million pounds. Compared to the previous month, shipments decreased 5.9 percent from the March 2018 revised total of 777.5 million pounds. Year-to-date shipments through April 2018 totaled 2,905.9 million pounds, a rise of 2.5 percent over the 2017 year-to-date total of 2,834.5 million pounds.
Shipments of Can Stock totaled 326.5 million pounds during April 2018, up 1.3 percent over the April 2017 total of 322.3 million pounds, while shipments of Non-heat Treatable Sheet (excluding Can Stock) rose five-tenths of one percent to 249.2 million pounds and shipments of All Other Sheet and Plate increased 20.8 percent to 156.0 million pounds.
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sheet and Plate Shipments
2017 2018*
The Aluminum Association Not Seasonally Adjusted
Millions of Pounds
The Aluminum Association
3Industry Activity Continued…
May 18, 2018
May 18 – New can stock (class) scrap receiptstotaled 56.2 million pounds during April 2018, in increase of 5.2 percent over the April 2017 total of 53.4 million pounds. Compared to the previous month, receipts were off 2.9 percent from the March 2018 total of 57.8 million pounds. Year-to-date receipts through April 2018 totaled 219.2 million pounds, up eight-tenths of one percent over the 2017 year-to-date total of 217.4 million pounds.
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
New Can Stock Scrap Receipts
2017 2018*
The Aluminum Association Not Seasonally Adjusted
Millions of Pounds
May 18 – Estimated shipments of Aluminum Forgings and Impacts by U.S. and Canadian producers totaled 31.4 million pounds during April 2018, a rise of 2.6 percent over the April 2017 total of 30.6 million pounds. Compared to the previous month, shipments decreased 7.1 percent from the March 2018 revised total of 33.8 million pounds. Year-to-date shipments through April 2018 totaled 125.7 million pounds, up 3.5 percent over the 2017 year-to-date total of 121.4 million pounds.10
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Forgings and Impacts Shipments
2017 2018*
The Aluminum Association Not Seasonally Adjusted
Millions of Pounds
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 [email protected]. © The Aluminum Association, Inc. All rights reserved.
The Aluminum Association
4Economic Activity
May 18, 2018
May 15 – Builder confidence in the market for newly-built single-family homes rose two points to a level of 70 in May after a downwardly revised April reading on the NAHB/Wells Fargo Housing Market Index (HMI). This is the fourth time the HMI has reached 70 or higher this year. The HMI chart gauging current sales conditions increased two points to 76 in May while the indexes measuring buyer traffic and expectations in the next six months remained unchanged at 51 and 77, respectively.
44 45
5458
69 70
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Housing Market Index (HMI)
National Association of Home Builders Seasonally Adjusted
May 14 – The total number of job openings in the U.S. increased to 6.6 million on the last business day of March according to the U.S. Bureau of Labor Statistics. Manufacturing job openings fell to 391 thousand, off 5.6 percent from February (r), and eight-tenths of one percent below a year ago. Hires in the manufacturing sector declined 4.7 percent from the previous month, but were up 12.7 percent over the level reached a year ago. The spread between hires and separations in manufacturing remained in positive territory (+12 thousand) as March hires were an estimated 364 thousand, while separations totaled 352 thousand (+0.6% m/m).
391
364352
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SOURCE: U.S. BUREAU OF LABOR STATISTICS/FRED
U.S. Manufacturing Job Openings and Labor Turnover
Openings Hires Separations
May 16 – The Federal Reserve Board announced that U.S. industrial production advanced seven-tenths of one percent in March, the third consecutive monthly increase. Manufacturing output increased five-tenths of one percent m/m. Year-over-year, manufacturing output has increased 2.0 percent, while the production of durable goods has increased 1.9 percent. At 107.3 percent of its 2012 average, total industrial production in April was 3.5 percent higher than it was a year earlier. Capacity utilization for the industrial sector climbed 0.4 percentage point in April to 78.0 percent, a rate that is 1.8 percentage points below its long-run (1972–2017) average.
107.3
105.0
100
102
104
106
108
U.S. Industrial Production Indexes2012 = 100
Total
Manufacturing
Federal Reserve Board Seasonally Adjusted
The Aluminum Association
5Economic Activity Continued…
May 18, 2018
May 16 – The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced that privately-owned housing starts in April 2018 were at a seasonally adjusted annual rate of 1,287,000 units, off 3.7 percent from the revised March 2018 rate of 1,336,000. Compared to a year ago, housing starts advanced 10.5 percent over the April 2017 rate of 1,165,000. Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,352,000. This was 1.8 percent below the revised March rate of 1,377,000, but 7.7 percent above the April 2017 estimate of 1,255,000. Year-to-date, privately-owned housing starts and authorized permits (not seasonally adjusted) were up an estimated 9.1 percent and 6.8 percent compared to 2017, respectively.
May 18 – Preliminary data published by Ward's Automotive show that North American (Canada, Mexico, and the United States) light vehicle production totaled 1.45 million units during April 2018, an increase of 8.0 percent year-over-year. Production in the U.S. rose 11.6 percent y/y to a total 980,048 units, while production in Canada advanced eight-tenths of one percent to 177,709 units for the month. Following a surprise decline last month, Mexican production increased 1.4 percent y/y to an April total of 291,643 units. Year-to-date in 2018, North American light vehicle production has totaled 5.81 million units, off eight-tenths of one percent from like-2017. U.S. production has increased five-tenths of one percent, while Mexican and Canadian production is essentially unchanged and off 8.4 percent, respectively.
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North American Light Vehicle Production(Thousands of units)
Light Vehicles 6-Month Average
WardsAuto InfoBank Not Seasonally Adjusted
May 17 – The Conference Board Leading Economic Index (LEI) for the U.S. increased again in April, with positive contributions from the yield spread, weekly hours in manufacturing, the ISM® new orders index, initial claims for unemployment insurance (inverted) and consumer expectations for business conditions outweighing negative contributions from stock prices and building permits. In the six-month period ending April 2018, the leading economic index increased 3.3 percent, slightly faster than the growth of 3.0 percent during the previous six months. The Coincident Economic Index (CEI), a measure of current economic activity, also improved in April. The coincident economic index rose 1.1 percent between October 2017 and April 2018, the same pace of growth as over the previous six months.
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US Privately-Owned Housing: Authorized Permits & Starts(Thousands of Units)
Housing Starts Authorized Permits
U.S. Census Bureau Seasonally Adjusted Annual Rate
The Aluminum Association
6Energy
May 17 – The U.S. Energy Information Administration reported that natural gas spot prices rose at most locations this report week (Wednesday, May 9 to Wednesday, May 16). The Henry Hub spot price rose from $2.72 per million British thermal units (MMBtu) last Wednesday to $2.78/MMBtu.
At the New York Mercantile Exchange (Nymex), the June 2018 contract price rose 8¢ from $2.737/MMBtu last Wednesday to $2.815/MMBtu.
May 18, 2018
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Crude Oil Near-Month Futures (WTI & Brent)(U.S. dol lars per barrel)
Brent
WTI
CME Group Inc.
May 18 – On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $71.28/bbl on Friday, May 18, up $0.58 (+0.8%) from last week's close of $70.70/bbl. Oil prices scored a third consecutive weekly gain, as traders continue to weigh pressure from growing U.S. crude production against support from potential disruptions to the flow of crude from the Middle East. Active U.S. oil-drilling rigs remained unchanged for the week, ending the string of weekly increases at six. Compared to last year, oil rigs have increased by 124. Brent Crude on London's ICE Futures exchange closed the week up at $78.51/bbl(+1.8%). Friday's spread between the two was $7.23/bbl, up over last week's spread of $6.42/bbl.
The Aluminum Association
7U.S. Dollar
May 18, 2018
May 11 – According to the most recent release by the Federal Reserve Board, the Nominal Broad Dollar Index closed the week at 120.62 on Friday, May 11th, essentially unchanged from the previous week's close. With the result, the Index halted a run of three consecutive weekly increases. Nevertheless, the Index remained well above its 30-day moving average for the fourth consecutive week. Over the last six months, the index has declined two-tenths of one percent, while it's off 3.2 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.
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7.00Chinese Yuan to US Dollar
Chinese Yuan to One U.S. Dollar
30 Day Moving Avg.
Federal Reserve Board
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1.38
1.40Canadian Dollar to US Dollar
Canadian Dollars to One U.S. Dollar
30 Day Moving Avg.
Federal Reserve Board
109.26
100.0
102.0
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106.0
108.0
110.0
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116.0
118.0
120.0Japanese Yen to US Dollar
Japanese Yen to One U.S. Dollar
30 Day Moving Avg.
Federal Reserve Board
1.20
1.00
1.05
1.10
1.15
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1.25
1.30US Dollar to Euro
U.S. Dollars to One Euro
30 Day Moving Avg.
Federal Reserve Board
110
115
120
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130
Weekly Nominal Broad Dollar Index(1997 = 100)
Broad Index 30 Day Moving Avg.
Federal Reserve Board
The Aluminum Association
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)
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 18, 2018