The global aluminum market is expected to be largely balanced this year, Norwegian producer Norsk Hydro said Tuesday.
"We see a global primary aluminium deficit in the quarter. This is driven by increasing deficit outside China. For the full year, we are maintaining our 4-6% annual aluminium demand growth outlook for 2017 and expect a largely balanced, global aluminium market," said the company's president and CEO, Svein Richard Brandtzaeg, in Hydro's second-quarter results announcement.
Global production of primary aluminum reached 15.8 million mt in Q2, up 9% on the year, while consumption was up 6% over the same period at 16.292 million mt, the company said in its quarterly report.
Hydro produced 523,000 mt of primary metal in Q2, up 1% from 518,000 mt in Q2 last year. The company said it has sold forward around 55% of its expected primary aluminum production for Q3 at a price of around $1,900/mt.
The company's bauxite production was 2.943 million mt in Q2, up 13% year-on-year, while its aluminium output rose 1% over the same period to 1.576 million mt.
"Lower realized alumina prices, driven by a lower alumina index and higher raw material consumption were partly offset by higher sales volumes," Hydro said, noting that its Alunorte and Paragominas units in Brazil raised production in the second quarter following planned maintenance in Q1, 2017.
In the first five months of 2017, Chinese alumina imports were 1.3 million mt, 13% lower than the same period in 2016, while bauxite imports increased 15% to 25.2 million mt over the same period, the company noted.
"Driven by the continued ramp-up of a new bauxite mine, imports from Guinea surged to 9.4 million mt in the first five months of the year, compared to 3.6 million mt over the same period in 2016," Hydro said, adding that supply of bauxite from the Atlantic basin accounted for 46% of Chinese imports over the period, up from 25% in same period in 2016.
In the downstream sector, European demand for flat rolled products in Q2 increased by around 4% from Q1, mainly due to seasonality and improved demand in the automotive, beverage can and general engineering segments. It was up around 3% year-on-year, the company said.
"The demand development in automotive remained solid due to the ongoing substitution of steel by aluminium for automotive body sheet," Hydro said, adding that building and construction demand improved, in particular in northern Europe and Spain.
"Foil demand was flat but showed some positive signs. The demand growth in general engineering was stable, driven by sound industrial activity. The European demand for flat rolled products is expected to slightly decline in the third quarter due to seasonality," the company added.
Demand for extruded products in both Europe and North America was up on the year in Q2, with North American demand up 3% from Q2, 2016 "driven by stronger automotive demand and higher activity in the building and construction activities, whereas demand from commercial transportation was declining," Hydro said.
In Europe, total demand for extruded products rose 2% from the same quarter last year on stronger automotive and transportation demand, as well as an improved building and construction market, it added.
