Global aluminium long-term outlook Q1 2016 Report

Commodity Market Report 29 March 2016

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Report summary

Wood Mackenzie's medium term outlook for the primary aluminium market has deteriorated somewhat since our Q4 Long Term Outlook. We have downgraded our economic outlook across multiple years which has driven down our demand growth forecasts in all key regions. At the same time, our new bottom-up China demand model indicates only a modest expansion in demand. Consequently, we have revised down our long term trend demand growth by 0.7% from the previous report. In contrast, metal output growth continues to struggle to keep pace with the slowdown in underlying demand. In China, any periodic strength SHFE prices seems to quickly break the resolve of producers to keep production off-line. This off-on process in China will only be resolved when the Chinese authorities finally take meaningful steps to permanently close capacity and address the build in inventory. We believe that this is some years away, with the first priority being excess steel and coal capacity.

Executive summary
Demand
- Overview
  - Changes to consumption forecasts since Q4 2015
- Forecasts by region
  - Asia
  - China
    - Chinese primary aluminium consumption (Mt and year-on-year % growth)
  - Asia (ex-China)
    - India
    - Japan
    - Indonesia
    - Thailand
  - The Middle East
  - Europe
  - North America
Supply
- Refinery production and capacity
  - Summary
  - Refinery production changes since Q4 2015 and forecasts
  - Global refinery production and capacity 2015-2035
  - Africa
  - North America
  - Latin America
  - Middle East
  - Asia
    - Elsewhere in Asia
  - Europe
  - Russia and the Caspian
  - Oceania
- Smelter production and capacity
  - Summary
  - Smelter production changes since Q4 2015 and forecasts
  - Global smelter production and capacity 2015-2035
  - Africa
  - North America
  - Latin America
  - Middle East
  - Asia
  - Elsewhere in Asia
  - Europe
  - Russia and the Caspian
  - Oceania
Supply-demand balances
- Alumina market outlook
- Long-term alumina prices
- Aluminium market review and outlook
- Risks to the forecast
  - Short term upside risks:
  - Short term downside risks:
  - Long term upside risks:
  - Long term downside risks:
- Long term aluminium prices
- Review of Historical Prices
  - Alumina
    - 2005
    - 2006
    - 2007
    - 2008
    - Global primary aluminium market balances and prices, 2004 - 2014
    - 2004
    - 2005

Tables and charts

This report includes 69 images and tables including:

Global primary aluminium consumption (Mt)
Primary aluminium demand by region, 2010 - 2035
Demand: Image 2

Demand: Image 3
Supply-demand balances: Table 1
Spot alumina prices, (fob $/t)
Malaysia’s bauxite shipment to China was healthy in first month of ban
Average one-year contract alumina prices, 1991-2035
Supply-demand balances: Table 3
Global SGA balance, 2010-2019, 2020, 2025 and 2035
Supply-demand balances: Image 3
Global supply - demand balance, LME cash price and stocks in days of consumption
Global aluminium balance, 2010-2035
Supply-demand balances: Image 5
China, India and Indonesia will help to drive new capacity growth
Metal prices, cash costs and aluminium stocks
Supply-demand balances: Table 6
Primary aluminium cash prices, 1980-2035, ($/t)
Main changes to primary aluminium consumption forecast Q4 2015 vs Q1 2016 (kt)
Asia primary aluminium consumption kt
Middle Eastern primary aluminium consumption (Mt and year-on year % growth)
European primary aluminium consumption (Mt and year-on year % growth)
European construction output
European car production
North American primary aluminium consumption (Mt and year-on year % growth)
North American imports of aluminium sheet
US construction output
Currently curtailed refineries
Actual and required refinery capacity utilisation, 2007-2025
Global alumina capacity and demand, 2005-2035
Revisions to Q4 2015 forecast, (kt)
Global alumina production 2015-2019, 2020, 2025 and 2035 (kt)
Africa alumina production 2015-2019, 2020, 2025 and 2035 (kt)
Contributions to 18Mt/a alumina supply growth before adjustments, 2015-2019
Supply: Table 5
Latin America alumina production 2015-2019, 2020, 2025 and 2035 (kt)
Middle East alumina production 2015-2019, 2020, 2025 and 2035 (kt)
Chinese alumina production increases, 2015-2019 (kt/a)
China bauxite imports, (Mt)
Some additional bauxite projects with China import potential
Asia alumina production 2015-2019, 2020, 2025 and 2035 (kt)
Europe alumina production 2015-2019, 2020, 2025 and 2035 (kt)
Russia and the Caspian alumina production 2015-2019, 2020, 2025 and 2035 (kt)
Oceania alumina production 2015-2018, 2020, 2025 and 2035 (kt)
Projected Non-China aluminium production increases, 2015-2019, (kt)
Global and ROW smelter capacity utilisation, 2007-2025
Supply: Image 6
Revisions to Q4 2015 forecasts (kt)
Global aluminium production 2015-2018, 2020, 2025 and 2035 (kt)
Africa aluminium production 2015-2019, 2020, 2025 and 2035 (kt)
North America aluminium production 2015-2019, 2020, 2025 and 2035 (kt)
Latin America aluminium production 2015-2019, 2020, 2025 and 2035 (kt)
Middle East aluminium production 2015-2019, 2020, 2025 and 2035 (kt)
Supply: Table 21
China’s planned smelter completion schedule, (kt/a)
Main contributors to Chinese aluminium production increases, 2015-2019 (kt/a)
Asia aluminium production 2015-2019, 2020, 2025 and 2035 (kt)
Europe aluminium production 2015-2019, 2020, 2025 and 2035 (kt)
Russia and the Caspian aluminium production 2015-2019, 2020, 2025 and 2035 (kt)
Oceania aluminium production 2015-2018, 2020, 2025 and 2035 (kt)
Global SGA market balances and prices (Mt)
Demand: Table 4
China end-use demand split
Construction completions by category
Can stock demand reach 550kt by 2025
Share of electric vehicles to increase over forecast period
Aluminium consumption and consumption per capita 2013 - 2015, (Mt and kg/capita)
Demand: Table 5
Supply-demand balances: Table 8