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US Common Alloy Conversion Prices to Fall Further in 2020 On Oversupply Woes

1. As destocking is likely to continue to occur through much of Q1 2020, US conversion prices for common alloy aluminum sheet continue to face downward pressure and are expected to fall by 12% - 13% in Q1 2020 compared to Q4 2019.

2. Further conversion price erosion is expected as domestic production capacity grows and demand remains muted; spot conversion prices are likely to fall an additional 5%-10% into Q2 2020.

3. The current surplus inventory is estimated to be around 293 kmton and represents nearly 2 months of supply per HARBOR estimates.

4. Muted demand seen in the building and construction sector as well as with commercial (truck/trailer) transportation.

5. Offshorenon-Chinesesuppliershaveincreasedtheir shipments of common alloy aluminum sheet into the US market and gained significant market share; which they are unlikely to relinquish in 2020.

6. Upcoming production expansions at domestic US rolling mills will continue to apply downward pressure to conversion prices into 2020 from current levels.

 

More details in full report.