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The protracted trade negotiations have progressed toward the possibility of removing all or some of the tariffs on Chinese imports to the United States. The softening US stance indicates a possible way toward a longer-term trade deal. This has allowed global risk appetite to improve, with the base metals complex building on gains made from recent positive tone as decent follow-through buying has emerged.

The deadline to remove sanctions against UC Rusal has been extended by the US Treasury Department’s Office of Foreign Assets Control (OFAC) to January 28 instead of January 21. Aluminium market participants had feared that the US Senate would block the removal of sanctions through a proposed resolution. But on Wednesday, senators voted 57-42 (with one abstention) to end debate on the measure preventing the removal of sanctions against Rusal. This was three votes shy of the 60 needed to advance the resolution to a final vote on the Senate floor, meaning the bid to keep US sanctions on Rusal failed.

In other supply news, Hydro’s Alunorte has received a technical note from the Brazilian environmental agency that it can now safely resume normal operations. However, the embargo by the Federal Court remains in force and that means that an immediate resumption of full operations remains unlikely in the short term though actions are taken to remedy it. With high market expectations that Alunorte will return to full production, alumina prices have been under downside pressure.

On the speculative front, LME fund managers increased their bearish exposure through fresh selling of 8,225 lots over the reporting week of January 4-11. As a result, LME aluminium’s net short fund position (NSFP) expanded to a record high of 23,076 lots, further indication that overall sentiment in the complex remains bearish. Short-sellers were clearly confident with their bearish holdings and added 7,086 lots while gross longs continue to liquidate their bullish exposure.

Aluminum Highlights

Week Ending: January 18, 2019An update on industry activity and economic indicators

Market ViewBy: Yang Cao, CFA, Senior Analyst – Metal Bulletin Research

The views expressed in the “Market View” are those of the author and do not necessarily represent the views of the Aluminum Association

Time for Action on Aluminum OvercapacityLet’s Get the Job Done.

Learn More

The Aluminum Association

2Industry Activity

January 18, 2019

January 18 – New can stock (class) scrap receiptstotaled 42.4 million pounds during December 2018, a decrease of 13.3 percent from the December 2017 total of 48.9 million pounds. Compared to the previous month, receipts were down 16.8 percent from the November 2018 total of 51.0 million pounds. Preliminary receipts for full-year 2018 totaled 653.7 million pounds, off 2.0 percent from the 2017 total of 667.1 million pounds.

30

40

50

60

70

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

New Can Stock Scrap Receipts

2017 2018*

The Aluminum Association Not Seasonally Adjusted

Millions of Pounds

January 17 – Shipments of Aluminum Powder and Paste to domestic markets by domestic producers, including imports by domestic producers, totaled 5.47 million pounds during December 2018, a decrease of 18.0 percent from the December 2017 total of 6.66 million pounds. Compared to the previous month, shipments were down 17.6 percent from the November 2018 revised total of 6.63 million pounds. Preliminary shipments through December 2018 totaled 81.84 million pounds, up 4.9 percent over the 2017 total of 78.01 million pounds.

Compared to December 2017, shipments of powder to domestic markets were off 18.6 percent to 4.69 million pounds, while shipments of pastewere down 13.7 percent to 0.77 million pounds..

0

3

6

9

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Domestic Shipments of Powder and Paste

2017 2018*

The Aluminum Association, Inc. Not Seasonally Adjusted

Millions of Pounds

The Aluminum Association, Inc. Not Seasonally Adjusted

Millions of Pounds

January 18 – Estimated shipments of Aluminum Forgings and Impacts by U.S. and Canadian producers totaled 25.5 million pounds during December 2018, off nine-tenths of one percent from the December 2017 total of 25.7 million pounds. Compared to the previous month, shipments were down four-tenths of one percent from the November 2018 total of 25.6 million pounds. Preliminary shipments for 2018 totaled 342.7 million pounds, up 1.1 percent over the 2017 total of 339.0 million pounds.

10

15

20

25

30

35

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Forgings and Impacts Shipments

2017 2018*

The Aluminum Association Not Seasonally Adjusted

Millions of Pounds

This report is based on information reported to the Association by participants, which is aggregated by the Association. While the Association believes that its statistical procedures and methods are reliable, it does not warrant the accuracy or completeness of the data. All data contained herein are subject to revision. For further information, contact Ryan Olsen, V.P. Business Information and Statistics at 1-703-358-2984 or email rolsen@aluminum.org. © The Aluminum Association, Inc. All rights reserved.

The Aluminum Association

3Economic Activity

January 18, 2019

January 15 – The Producer Price Index for final demand (which includes goods and services) fell two-tenths of one percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported. Final demand prices advanced one-tenth of one percent in November and six-tenths of one percent in October. The index for final demand goods fell four-tenths of one percent, while final demand goods less food and energy rose one-tenth of one percent month-over-month. On an unadjusted basis, the final demand index increased 2.4 percent for the 12 months ended in December.

-0.2%

-0.4%

0.1%

-1.0%

-0.5%

0.0%

0.5%

1.0%

Monthly Change in Selected PPI Indexes

Final Demand

Final Demand Goods

Final Demand Goods (Less Food & Energy)

Bureau of Labor Statistics Seasonally Adjusted

January 15 – Preliminary data published by Ward's Automotive show that North American (Canada, Mexico, and the United States) light vehicle production totaled 1.16 million units during December2018, down 2.0 percent from the December 2017 total of 1.19 million units. While production typically declines in December, this was the lowest December production since 2013. Year-over-year production fell 3.7 percent in Canada, while production in Mexico declined 9.0 percent. U.S. production increased seven-tenths of one percent year-over-year to 792 thousand units. North American light vehicle production totaled an estimated 16.98 million units in 2018, off 2.5 percent from the 2017 total.

1,000

1,200

1,400

1,600

1,800

North American Light Vehicle Production(Thousands of units)

Light Vehicles 6-Month Average

WardsAuto and Autonews Not Seasonally Adjusted

January 15 – According to the most recent DAT Trendlines release (January 6 – January 12), after two holiday weeks, truckload capacity came back strong last week, which knocked down national average rates for dry van ($2.05) and flatbeds ($2.42). Freight moves now are less urgent, and the e-commerce and retail holiday season is over. Falling fuel surcharges are also contributing to the decline in rates.

The Aluminum Association

4Economic Activity Continued…

January 18, 2019

January 18 – The Federal Reserve Board announced that U.S. industrial production advanced three-tenths of one percent in December, after increasing four-tenths of one percent in November. Overall manufacturing output increased 1.1 percent m/m, while the production of durable goods was up 1.3 percent. Year-over-year, manufacturing output has increased 3.4 percent. At 109.9 percent of its 2012 average, total industrial production was 4.0 percent higher in December than it was a year earlier. Capacity utilization for the industrial sector rose 0.1 percentage point in December to 78.7 percent, a rate that is 1.1 percentage points below its long-run (1972–2017) average.

109.9

107.3

100

102

104

106

108

110

112

U.S. Industrial Production Indexes2012 = 100

Total

Manufacturing

Federal Reserve Board Seasonally Adjusted

January 16 – Builder confidence in the market for newly-built single-family homes rose two points to 58 in January on the NAHB/Wells Fargo Housing Market Index (HMI). All the HMI indices posted gains in January. The index measuring current sales conditions rose two points to 63, the component gauging expectations in the next six months increased three points to 64 and the metric charting buyer traffic edged up one point to 44.

56 57

61

67

72

58

20

30

40

50

60

70

80

Housing Market Index (HMI)

National Association of Home Builders Seasonally Adjusted

The Aluminum Association

5Energy

January 18, 2019

40

45

50

55

60

65

70

75

80

85

90

Crude Oil Near-Month Futures (WTI & Brent)(U.S. dol lars per barrel)

Brent

WTI

CME Group Inc.

January 18 – On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $51.59/bbl on Friday, January 11, up $3.63 (+7.6%) from last week's close of $47.96/bbl. Oil prices posted a third weekly gain in a row, as news on negotiations between the U.S. and China raised hope for an end to the trade disputeand separate data pointed to further declines in global crude production. Active U.S. oil-drilling rigsfell by 21 last week to 852, the largest weekly decline since February 2016. Compared to last year, oil rigs have increased by 105. Brent Crude on London's ICE Futures exchange closed the week up at $62.70/bbl (+3.7%). Friday's spread between the two was $8.90/bbl, up just ¢1 from last week's spread of $8.89/bbl.

January 17 – The U.S. Energy Information Administration reported that natural gas spot pricesrose at most locations this report week (Wednesday, January 9 to Wednesday, January 16). Henry Hub spot prices rose from $2.91 per million British thermal units (MMBtu) last Wednesday to $3.61/MMBtu.

At the Nymex, the price of the February 2019 contract increased 40¢, from $2.984/MMBtu last Wednesday to $3.384/MMBtu. The price of the 12-month strip averaging February 2019 through January 2020 futures contracts climbed 12¢/MMBtu to $2.965/MMBtu.

The Aluminum Association

6U.S. Dollar

January 18, 2019

January 11 – According to the most recent release by the Federal Reserve Board, the Nominal Broad Dollar Index closed the week at 126.21 on Friday, January 11th, falling nine-tenths of one percent from the previous week's close of 127.30. This is the sixth decline in the last seven weeks for the Index. The Index ended the week below its 30 day-moving average for the third consecutive week. Over the last six months, the index has advanced 1.9 percent, while it's up 6.5 percent over the last 12 months.

The nominal broad dollar index is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a broad group of major U.S. trading partners.

6.76

6.20

6.30

6.40

6.50

6.60

6.70

6.80

6.90

7.00

7.10Chinese Yuan to US Dollar

Chinese Yuan to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

1.33

1.20

1.22

1.24

1.26

1.28

1.30

1.32

1.34

1.36

1.38

1.40Canadian Dollar to US Dollar

Canadian Dollars to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

108.34

104.0

106.0

108.0

110.0

112.0

114.0

116.0

118.0Japanese Yen to US Dollar

Japanese Yen to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

1.15

1.00

1.05

1.10

1.15

1.20

1.25

1.30US Dollar to Euro

U.S. Dollars to One Euro

30 Day Moving Avg.

Federal Reserve Board

115

120

125

130

Weekly Nominal Broad Dollar Index(1997 = 100)

Broad Index 30 Day Moving Avg.

Federal Reserve Board

The Aluminum Association

7The Aluminum Association, founded in 1933, works globally to aggressively promote aluminum as the most sustainable and recyclable automotive, packaging and construction material in today’s market. The Association represents North America and foreign-based primary producers of aluminum, aluminum recyclers, producers of semi-fabricated products and foundries as well as suppliers to the industry or distributors or jobbers.

The Aluminum Association's statistical programs provide industry information on primary aluminum production, new orders of mill products, industry shipments, end use market estimates, inventories, recycling and foreign trade on a monthly, quarterly and annual basis. Special surveys provide data on specific subjects such as primary capacity, flat roll capacity, inventories and castings shipments. Custom reports are available on a for-fee basis. Web briefings are also available upon request.

Industry OverviewAluminum Statistical Review (Annual Fact Book)Aluminum Highlights (Weekly)Aluminum Situation (Monthly)Summary of Producer Shipments and Inventories (Monthly)

Primary AluminumPrimary Aluminum Production – U.S. and Canada (Monthly)Primary Installed Capacity (Annual)Shipments of Primary Aluminum by Form (Quarterly)

Mill ProductsIndex of Net New Order Receipts for Aluminum Mill Products (Monthly)Can Stock Shipments (Monthly)Electrical Conductor Shipments (Monthly)Extruded Products Shipments and Press Utilization (Monthly)Flat Roll Capacity (Annual)Foil Shipments (Monthly)Forging and Impacts Shipments (Monthly)Rod, Bar, and Wire Shipments (Monthly)Sheet and Plate Shipments (Monthly)

End UseExtrusion Shipments by End Use (Quarterly)Fin Stock Shipments by End Use (Quarterly)Foil Shipments by End Use (Monthly)Sheet and Plate Shipments by End Use (Quarterly)

CastingsU.S. Foundry Castings Shipments (Quarterly)Canada Foundry Castings Shipments (Annual)

RecyclingNew Can Stock (Class) Scrap Receipts (Monthly)Used Beverage Can Reclamation (Annual)

Foreign Trade (based on government customs data)Summary of U.S., Canada and Mexico Imports and Exports (by Commodity), MonthlyForeign Trade Online Database - U.S., Canada and Mexico Exports & Imports of Aluminum (By Commodity, by Country)

For a complete list of statistical publications and reports visit our bookstore.

January 18, 2019