Upstream market developments
The Platts alumina price index started the year at USD 349 per mt ranging from USD 272 to USD 484 per mt during 2017, ending the year at USD 389 per mt. Prices averaged USD 355 per mt for the year, an increase of 40 percent compared to 2016. Prices as a percentage of LME varied, averaging 17.8 percent for the year compared with 15.7 percent in 2016. Spot prices at the end of 2017 represented 17.2 percent of LME.
Chinese alumina imports amounted to 2.9 million mt in 2017, a 5 percent decrease compared with 2016. The imports were supplied by excess capacity in the market outside China. Also in 2018, the alumina supply outside China was expected to considerably exceed demand. However, the Alunorte production cut, if sustained over a longer period, might lead to an undersupply situation outside China.
Bauxite imports into China increased to 68.8 million mt, or 32 percent higher compared to 2016. The increase was driven by surging imports from Guinea reaching 27.6 million mt in 2017 from 11.9 million mt in 2016 as new bauxite mines continued to increase production. Guinea therefore became the largest supplier to China, ahead of Australia with 25.5 million mt, 20 percent higher compared to 2016. Imports from Malaysia decreased 37 percent to 4.9 million mt as a bauxite mining moratorium imposed from January 2016 was enforced more effectively. After a three year hiatus because of a Government imposed export ban, imports from Indonesia resumed in July reaching 1.3 million mt for the year. Imports from Brazil decreased 25 percent to 3.3 million mt.
According to Chinese import statistics, the monthly average delivered China bauxite price was relatively stable in 2017, ranging between USD 48 and 53 per mt. Prices averaged USD 51 per mt for the year, an increase of 3 percent compared to 2016.
Three month LME prices started the year around USD 1,700 per mt and increased every quarter. In the last quarter, the prices continued to rise as seen in third quarter, and spiked considerably towards the end of the period. At the end of the year prices had increased by around USD 550 per mt over the year, reaching a level of around USD 2,240 per mt. Prices averaged USD 1,885 per mt in the first half of 2017 and increased to an average of USD 2,073 per mt in the second half of the year.
North American standard ingot and product premiums started the year at USD 200 per mt and at USD 138 per mt for the standard ingot premium in Europe. The premiums continued to fluctuate around these levels for most of the year, although both premiums turned upwards towards year-end. Average North American standard ingot premiums increased USD 8 per mt over the year, reaching USD 208 per mt at year end. Corresponding standard ingot premiums in Europe increased about USD 25 per mt, reaching USD 162 at the end of 2017. Premium developments have been influenced by exports of semi-finished products from China and metal availability from warehouses.
Global primary aluminium consumption increased by 5.8 percent to 63.6 million mt in 2017. Global supply increased by 7.7 percent to 63.5 million mt resulting in a rather balanced situation, with a deficit of around 0.1 million mt. For 2018, global primary aluminium supply and demand is expected to increase by 4-5 percent, resulting in a largely balanced global market also in 2018.
Demand for primary aluminium outside China increased by around 3.4 percent, while corresponding production increased by 1.0 percent. Overall, demand outside China exceeded production by close to 2.0 million mt in 2017. Demand for primary aluminium outside China is expected to grow by around 3-4 percent in 2018. Corresponding production is also expected to be up 3-4 percent, resulting in a deficit in the world outside China also in 2018.
Demand for primary metal in China increased around 8.0 percent to 34.4 million mt in 2017. Production increased by around 13.4 percent, resulting in a surplus of around 1.9 million mt for the year. Chinese primary production growth is expected to fall in 2018 to around 4-6 percent, influenced by cutbacks due to illegal capacity and winter closures during 2018. This follows the directions given by the Chinese government in 2017, whereby capacity expansions in 2018 will be closely controlled, and principally be balanced through a quota scheme for removing old and idled, uncompetitive capacity. This should reduce surplus capacity going forward. Primary demand is estimated to increase by around 4-6 percent, resulting in a rather stable surplus in 2018.
LME stocks fell throughout the year from 2.2 million mt at the end of 2016 to 1.1 million mt at the end of 2017. Most of the metal in warehouses continues to be owned by financial investors. Total inventories, including unreported inventories are estimated to have been rather stable throughout 2017. This means that stocks have moved from reported to unreported warehouses. The total stock level is estimated to be 12.5 million mt at the end of 2017.
Demand for extrusion ingot, foundry alloys and sheet ingot in Europe has been solid during 2017 and increased compared to the previous year. The consumption of wire rod in the European market went up moderately in 2017 compared to 2016. Consumption of extrusion ingot has been strong in the US also in 2017, while the demand for primary foundry alloys also increased compared to 2016. In Asia (excluding China), the market for extrusion ingot and primary foundry alloys continued to show moderate growth.
Downstream market developments
The European market for flat rolled products increased by around 3.7 percent in 2017 and reached another record year. Demand growth was stronger in the second half of the year driven by automotive and general engineering.
The European market for extrusion experienced stronger automotive and transportation demand, as well as improved demand in the building and construction markets. North America was also driven by stronger automotive demand and higher activity in the building and construction market. The commercial transportation market has declined slightly, but improved towards the end of the year.
Energy market developments
In 2017, Nordic electricity prices increased compared to the previous year, primarily due to increasing exports towards Continental Europe. The prices over the year remained quite stable amid a mild winter season and a consistent inflow during the spring thaw season. The overall hydrological situation was stable ranging somewhat below normal before improving significantly in late autumn. Power prices in Southern Norway remained close to the Nordic system price due to the hydrological situation and improving export capacities. Nordic consumption remained unchanged at 386.8 TWh in 2017, while total power production increased by 6.2 TWh to 398.1 TWh.
In Brazil, after two years of reduced demand due to a recession, the economic recovery had a positive effect on demand in 2017.
Annual report 2017
Annual report 2017
Annual report 2017
Annual report 2017