The global primary aluminum market "is moving towards a deficit in 2018, and larger than earlier forecast, driven by slower-than-expected supply growth," Norwegian producer Hydro said Wednesday in its third-quarter results statement.
Production outside China is expected to increase by 1%-2% in 2018, the company said, adding that while production of primary aluminum in China grew by 13% in 2017, "due to capacity control measures introduced in 2017 combined with higher raw material prices in 2018, production increase is expected to be reduced to around 0%-1% in 2018."
Global demand for primary aluminum grew by 5.7% in 2017 and is expected to grow by around 3%-4% in 2018, Hydro said. Chinese demand is expected to increase by 4%-6% in 2018, lower than the 8% demand growth seen in 2017.
In Q3, global primary aluminum consumption increased compared to the third quarter of 2017, due to improved global sentiments and continued strong demand growth in China, although compared to Q2 2018, global demand decreased due to seasonal effects in China, the company noted.
Total global stocks at the end of the third quarter were estimated to be 11.2 million mt, down around 300,000 mt from the end of Q2, Hydro said. Hydro produced 497,000 mt of primary metal in the third quarter of 2018, down 6% from output of 527,000 mt in Q3 last year as its part-owned Albras smelter in Brazil continued to operate at 50% capacity.
For the first nine months of the year, the company produced 1.503 million mt of primary metal, down from 1.566 million mt in January-September 2017. Hydro has sold forward around 64% of its expected primary aluminum production for the fourth quarter of 2018 at a price level of around $2,050/mt.
