The US must boost its imports of primary aluminum products sixfold over the next seven years to meet growing demand from the automotive and construction sectors, an executive with Middle East producer Dubal said Tuesday.
US primary aluminum output fell to a 66-year low of 600,000 mt in 2016 because of rising labor/energy costs and global competition, causing many smelters to close, Dubal America managing director Adel Abubakar said in a presentation at the S&P Global Platts Aluminum Symposium 2017 in Scottsdale, Arizona.
At the start of 2017, the US had five operating primary aluminum smelters compared with 32 in 1980.
Combined US and Mexican primary aluminum production totaled 900,000 mt last year, down from 2.5 million mt in 2005, he said, citing figures from research firm Harbor Intelligence.
In 2017, the US is expected to experience a primary aluminum deficit of 4.86 million mt, while Mexico is expected to see a deficit of 890,000 mt.
"As a result, North America will need to increase imports of primary products by sixfold over the next seven years," Abubaker said.
In contrast to the US and Mexico, Chinese primary aluminum production totaled 33.1 million mt in 2016, up from 7.7 million mt in 2005. Primary production from the Middle East totaled 5.7 million mt in 2016, up from 1.8 million mt in 2005.
That trend is expected to continue for the next several years, with the Middle East and Asia accounting for most of the growth in primary aluminum production, he added.
Global demand for primary aluminum will continue to rise because of growing working-age populations in emerging economies that consume aluminum products, continued urbanization, industrialization, rising incomes in the developing world and growing demand from key sectors like transportation, Abubakar added.
Primary aluminum demand from the building and construction sector will continue to expand over the next few years, more than offsetting softening demand from the tractor trailer market, he said.
Demand for primary aluminum from the North American building and construction sector is expected to grow 4.5% in 2017 and 2% in 2018. Demand from the durable goods sector is expected to grow 4% in 2017 and 3.9% in 2018.
Moreover, soft demand seen in the global automotive sector probably ended last year, Abubakar said.
Challenges in meeting the demand for imported primary aluminum include trade protectionist policies, higher alumina and energy costs, low profit margins, turmoil in transoceanic shipping industry and strong demand from the Middle East, he said.
