Norwegian producer Hydro expects the global primary aluminum market to be "largely balanced" in 2017, it said Wednesday.
Global primary aluminum consumption decreased by 2.1% to 16.2 million mt in the third quarter compared to Q2, mainly due to seasonality, but was up 5.6% year on year, the company said in its Q3 report.
Outside China, demand seasonally decreased by 2.8% in Q3 compared to Q2, while the year-on-year increase from Q3 2016 was 3.7%.
Consumption outside China amounted to 7.3 million mt for Q3, while corresponding production amounted to 6.8 million mt, an increase of 1.9% compared to Q2.
"Production outside China experienced a 0.8% increase compared to the third quarter of 2016, largely driven by ramp up of new production capacity in India," Hydro said.
Demand for primary aluminum outside China grew by around 3.2% in 2016, and is expected to grow by 3%-4% in 2017, the company said.
Compared to Q2 2017, Chinese aluminum consumption decreased by 1.5% to 8.8 million mt, mainly due to lower seasonal activity in Q3, but the year-on-year increase compared to Q3 2016 was 7.2%.
Corresponding aluminum production decreased by 0.1% compared to Q2, but was up 12.9% compared to Q3 2016.
"The ramp-up of new capacity continues in China, but at the same time the government has ordered closing of plants, as some smelters are running without governmental approvals," Hydro noted, adding that the Chinese government has also announced that there will be additional smelter curtailments in order to reduce winter air pollution in a number of Chinese cities.
Demand for primary aluminum in China is expected to grow by around 6%-8% in 2017, with production expected to increase by 10%-12%, the company said.
Total global stocks at the end of Q3 were 12 million mt, in line with three months earlier and up 0.3% from a year earlier, Hydro noted.
While London Metal Exchange stocks declined further -- amounting to 1.3 million mt at the end of Q3, down 100,000 mt over the quarter and down 900,000 mt from year-earlier levels -- Chinese reported stocks increased 400,000 mt from the end of Q2 and 1.4 million mt since the end of Q3 2016, the company said.
"Estimated unreported global stocks have fallen 0.3 million mt compared to the second quarter of 2017 and fallen 0.1 million mt compared to the third quarter of 2016," Hydro said.
