Singapore 13/05/2016 - The deficit in the aluminium market, excluding China, is expected to widen to 2.4 million tonnes in 2016, from 1.2 million tonnes last year, said Rusal in its January-March financial result statement on Friday.
This follows a forecasted 100,000-tonne decline in aluminium production in the rest of the world, excluding China, to 26.2 million tonnes this year, the Russian aluminium producer said.
The current all-in aluminium price means that around five million tonnes of smelting capacity ex-China continue to be loss-making, said Rusal.
Rusal also continues to see Chinese aluminium production grow at its slowest pace during the last five years or by 4.8 percent in 2016, resulting in global market deficit of 1.2 million tonnes in 2016, versus a 600,000-tonne of surplus in 2015. Its forecast is unchanged from March.
Aluminium supply in China had continued to slow down in the first quarter of this year. Out of 4.4 million tonnes of production curtailments in 2015, 585,000 tonnes were restarted while 715,000 tonnes were newly commissioned in the first quarter, Rusal estimated. At the same time, 604,000 thousand tonnes were additionally idled during the period, it said.
Within China, aluminium inventories declined by 421,000 tonnes year-on-year in January-March reflecting the capacity cuts and an improving metal balance, despite traditional restocking at the beginning of each year. From a peak of 1.2 million tonnes in May 2015, stocks have dropped by 45 percent, noted Rusal.
Chinese semis export growth is expected to slow further in 2016 compared to 2015 on lower price arbitrage due to lower premium expectations ex-China and higher SHFE prices resulting from local capacity curtailments, it added.
Global aluminium demand grew by 5.6 percent year-on-year to 14.0 million tonnes in the first quarter, with demand ex-China rising by 2.5 percent year-on-year to 6.9 million tonnes. The strongest demand growth came from India - up 6.0 percent year-on-year - followed by the Middle East, where demand increased 5.8 percent year-on-year during the quarter.
Rusal expects global aluminium demand to grow 5.3 percent or three million tonnes to 59.6 million tonnes this year. Chinese demand growth is expected to remain strong, rising seven percent to 31 million tonnes in 2016.
The transportation sector is expected to provide the biggest growth contribution in 2016, followed by construction and electrical/consumer durables and packaging sectors, it said.