Alcoa Corp has trimmed its aluminum supply surplus forecast for 2017 to 300,000-700,000 mt from its previous forecast of 400,000-800,000 mt, the US producer said late Monday.
The overall figure comprises a 1.9 million to 2.1 million mt surplus in China, partly offset by a deficit of 1.4 million to 1.6 million mt in the world ex-China.
The company has raised its forecast global aluminum demand growth this year from 4% to 4.5-5%, comprising growth of 6.5-7% within China and 2.5-3% elsewhere.
Alcoa shipped 801,000 mt of aluminum products in the first quarter, up from 764,000 mt in Q1, 2016.
"Management adjusted their aluminum price outlook up to $1,900/mt, while lowering their alumina price outlook to $305/mt for the remainder of 2017," US investment bank Cowen and Company said in a research note Tuesday.
"The reasoning behind the increase for the aluminum prices stems from higher demand growth coupled with the expectation for further curtailments in China. Chinese prices are lagging global prices as alumina, energy, and metal prices increase," the bank said.
"Alcoa estimates that 20% of Chinese smelting production is currently unprofitable. These trends have pushed China up the cost curve and put melting margins under pressure, which is likely to lead to additional curtailments in China this year," it added.
Alcoa reported net income of $221 million in Q1, its first full quarter as a stand-alone company, compared with a net loss of $219 million in Q1 last year on stronger alumina and aluminum pricing.
Alcoa Corp. was created last November when US aluminum producer Alcoa Inc. divided into two companies -- Arconic, focused mainly on aerospace markets, and Alcoa Corp., comprising the former company's existing upstream mining and smelting divisions.
