ROW’s Production Reaches an All-Time Record High; Expansion to Accelerate in 2020
Summary
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Primary aluminum production in the Western World expanded in August at the strongest rate in six months... up by 0.6% m/m, amid production gains across almost every region (the Middle East led the expansion). Production reached a record high for an August and is on track to accelerate ahead as: Alba’s line 6 and Albras’ smelter operate at fully capacity. Moreover, restarts/ramp-ups in Canada, Iran, India, and Iceland will continue to progress ahead.
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Conversely, Chinese production temporarily interrupted its recovery amid output disruptions in Shandong and Xinjiang... In August, primary aluminum production declined by 1.6% m/m, experiencing the largest monthly decline in twenty months as disruptions in domestic production impacted as much as 1.5 million mtpy capacity.
...but is on track to expand further as we move into 2020, amid: a) improving smelting profit margins (now at two-year highs), b) the likely restart of disrupted capacity in Shandong and Xinjiang before the end of year, c) the unlikely implementation of blanket production curbs this winter, and d) around one million mtpy of new capacity set to ramp up in the last quarter of 2019.
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World’s primary aluminum production growth rates to double in 2019 and further accelerate in 2020. We continue to expect global primary aluminum production to increase by 965 kmton in 2019 (or 1.5% y/y), almost entirely driven by gains in ROW, and to experience in 2020 even a larger expansion (of 2.5 million mton or 3.9% y/y). ROW’s production is on track to post one of the largest expansions on record.