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Aluminum Highlights

Week Ending: January 13, 2017An update on Industry activity and economic indicators

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.

Market ViewBy: Yang Cao, CFA, Senior Analyst – Metal Bulletin Research

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

LME aluminium continues to rebound this week amid renewed upward pressure across the base metals, in part in response to a weaker dollar and encouraging Chinese inflation data. The three-month aluminium prices just topped the November high at $1,794.50 per tonne by trading at $1,795 per tonne on Thursday and Friday. Weekly average three-month price was up 3.3% to $1,755/tonne from previous week’s $1,699/tonne.

While the cash/3m spread remained at backwardation, significant stock inflows and steady pace of outflows had calmed the tightness in nearby spreads – the cash/3m was at $0.5/tonne backwardation compared with a peak of $21.5/tonneon December 22. Gross stock inflows amounted to 197,750 tonnes in December and have totaled 80,350 tonnes since the start of 2017.

In the physical market, premiums strengthened noticeably in Asia this week on expectations of tighter supply after the 27% quarter-on-quarter increase in the settlement of the first-quarter MJP premium, which was finally settled at $95 per tonne. US premiums also rose, which seems to reflect a strong restocking cycle at start to 2017 while supply remains tight. But premiums were little changed in Europe because consumers remain well covered for the month.

Shorts remain concentrated in the January contract - five entities collectively hold 40% of the open interest. Meanwhile, there are insufficient longs - there are three entities at 35% only. As well, there is a single dominant warrant holder at 50-79% while the more sensitive ‘tom’/cash also has one entity holding a similar proportion.

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2Industry Activity

January 10 – Aluminum imports of ingot, scrap and mill products into the U.S. and Canada (excluding cross-border trade) totaled 722 million pounds in November 2016, up 73.6 percent over the November 2015 total of 416 million pounds. Including scrap, which accounted for roughly 49.7 percent of reported aluminum exports in November, exports totaled 510 million pounds, down 1.4 percent from a year ago. Excluding scrap, exports totaled 257 million pounds, up 15.6 percent over last year. Exports of scrap decreased 14.2 percent year-over-year. Through November of 2016, total imports were up 31.0 percent to 7,255 million pounds while exports were down 3.0 percent to 5,633 million pounds.

January 13, 2017

January 9 – The Association’s “Index of Net New Orders of Aluminum Mill Products” for December decreased 2.3 percent from the previous month. Orders for flat roll products were down one-tenth of one percent, while orders for extruded products decreased 9.5 percent and orders for redraw rod were off 8.0 percent. Compared to December 2015, orders decreased 2.5 percent. On average, orders recorded by domestic producers in 2016 were up eight-tenths of one percent over last year.

January 11 – 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 3,989,258 tonnes during December 2016, up 7,105 tpy (0.2%) from the November 2016 rate of 3,982,153 tonnes. The production rate in the U.S. was down five-tenths of one percent m/m, while the Canadian production rate was up three-tenths of one percent. Compared to a year ago, the North American annual rate was 8.7 percent below the December 2015 rate of 4,371,605 tonnes. Actual production in 2016 totaled 4,027,318 tonnes, 9.8 percent below the 2015 total of 4,466,555.

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3Industry Activity Cont…

January 13 – Estimated shipments of Aluminum Foil by U.S. and Canadian producers totaled 61.2 million pounds during December 2016, an increase of 10.4 percent over the December 2015 total of 55.4 million pounds. Compared to the previous month, shipments decreased 19.3 percent from the November 2016 total of 75.9 million pounds. Shipments for 2016 totaled 950.3 million pounds, up eight-tenths of one percent over the 2015 total of 943.0 million pounds.

January 13, 2017

January 13 – Shipments of can stock by domestic producers totaled 315.3 million pounds during December 2016, a decrease of 8.8 percent from the December 2015 total of 345.5 million pounds. Compared to the previous month, shipments were down 8.3 percent from the November 2016 total of 343.6 million pounds. Shipments for 2016 totaled 4,154.9 million pounds, off six-tenths of one percent from the 2015 total of 4,178.3 million pounds.

Compared to December 2015, producer shipments of can stock to U.S. markets were down 6.0 percent to 272.6 million pounds, while exports decreased 23.2 percent to 42.7 million pounds.

January 13 – Estimated net shipments of Aluminum Sheet and Plate by U.S. and Canadian producers totaled 634.0 million pounds during December 2016, off 1.9 percent from the December 2015 total of 646.4 million pounds. Compared to the previous month, shipments decreased 7.0 percent from the November 2016 revised total of 681.7 million pounds. Preliminary shipments for 2016 totaled 8,390.5 million pounds, up seven-tenths of one percent over the 2015 total of 8,335.0 million pounds.

Shipments of Can Stock totaled 315.3 million pounds during December 2016, down 8.8 percent from the December 2015 total of 345.5 million pounds, while shipments of Non-heat Treatable Sheet (excluding Can Stock) rose 2.2 percent to 196.6 million pounds and shipments of All Other Sheet and Plate increased 12.5 percent to 122.2 million pounds.

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4Economic Activity

January 10 – The number of job openings in the U.S. was little changed at 5.5 million seasonally adjusted, on the last business day of November according to the U.S. Bureau of Labor Statistics. Over the month, hires and separations (including quits, layoffs and discharges, and other separations) were also little changed at 5.2 million and 5.0 million, respectively. In manufacturing, the number of job openings totaled 324 thousand, up 1.3 percent over October, and up 36.1 percent over a year ago. Separations in the manufacturing sector increased to 275 thousand, up from 269 thousand in October.

January 13, 2017

January 10 – Canadian housing starts increased 10.6 percent in December, to a seasonally adjusted annual rate (SAAR) of 207,041 units according to the Canadian Mortgage and Housing Corporation (CMHC). This followed a decrease of 4.4 percent in November. The December results surpassed their six-month moving average (198,053) for just the second time in the last six months. The SAAR of urban starts increased to 187,621 in December, 11.8 percent above theNovember rate. Multiple urban starts were up 13.9 percent to 120,750 units, while the single-detached urban starts segment increased to 66,871 units (+8.1%).

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5Energy

January 13 – Federal offices were closed on January 16, 2017 in observance of Martin Luther King Jr. Day. Our weekly update of the Nominal Broad Dollar Index will resume next week.

Last week, the Index closed at 128.18, essentially unchanged from the Friday, December 30 close of 128.21. Over the last six months, the index is up 5.0 percent, while it's up 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.

January 13 – On the NYMEX, near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $52.37/bbl on Friday, January 13, down $1.62 (-3.0%) from last week's close of $53.99/bbl. Crude oil prices experienced the largest weekly decline since early November as traders expressed doubts over compliance with the output-cut agreement. Active U.S. oil-drilling rigs were off 7 this week to 522, following 10 consecutive weeks of increases. Compared to last year, oil rigs have increased by 7. Brent Crude on London's ICE Futures exchange also closed the week down at $55.45/bbl (-2.9%). Friday's spread between the two was $3.08/bbl, down from last week's close of $3.11/bbl.

January 13, 2017

January 12 – The U.S. Energy Information Administration reported that natural gas spot prices fell at most locations this report week (Wednesday, January 4 to Wednesday, January 11). The Henry Hub spot price fell from $3.37 per million British thermal units (MMBtu) last Wednesday to $3.28/MMBtu. At the New York Mercantile Exchange (Nymex), the February 2017 contract fell 4¢ from $3.267/MMBtu last Wednesday to $3.224/MMBtu.

U.S. Dollar

The Aluminum Association

6The 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.

January 13, 2017