Follow us on:

The prompt-month New York Mercantile Exchange (NYMEX) natural gas contract has traded range-bound over the past month, primarily between $1.60 per MMBtu and $1.90 per MMBtu. The trading range was established after the prompt contract hit a 20+ year low of $1.519 per MMBtu on March 23. The contract did briefly jump above the $2.00-per-MMBtu level on May 5 after an explosion on the TETCO pipeline system in Kentucky, but pulled back into the established trading range the next day and has remained there since. Despite the sideways trading of the prompt contract, the 2021 NYMEX natural gas strip has trended higher over the past two months, due primarily to a decrease in natural gas production. The Energy Information Administration’s (EIA) most recent Short-Term Energy Outlook forecast that production will fall by approximately 9.4 Bcf per day, or close to 10%, by the end of 2020, pinching the supply and demand spread a bit. Production has already fallen over 5.0 Bcf per day since the beginning of April, though much of the expected declines will come from primarily crude oil-centered production areas where natural gas is produced as a byproduct. The decline in production does not signal a scarcity in natural gas supply, but highlights the relationship between natural gas and crude oil production in the United States and how demand destruction across both commodities is impacting domestic production. Overall, the balance of demand destruction due to the impact of the COVID-19 pandemic with other fundamental factors will drive pricing as we head into the summer cooling season.

After trading at record lows as the May contracts were expiring, both West Texas Intermediate (WTI) and Brent crude oil prices have rebounded into the mid-$30 range. The prompt WTI contract traded to a low of -$40.32 per barrel on April 20 as the May contract was nearing settle. The negative trades signaled that producers had run out of room to store crude at that time and were willing to pay to have crude taken off their hands. The negative trading was short lived and the prompt contract moved back up above $30 per barrel in the coming weeks. COVID-19 has had major impacts both domestically and internationally, with global crude demand down over 30% in April. Transportation demand is starting to pick back up in the United States, but overall demand remains well below average and domestic production has fallen nearly 13% since the beginning of March in response. OPEC and other producing nations, including Russia, are expected to extend their production curtailments, set to begin expiring in July, through the end of 2020 in an attempt to push crude prices higher.

Aluminum Highlights

Week Ending: May 29, 2020An update on industry activity and economic indicators

Market View

By: Beau Walker, Technical Lead, Projects and Analytics – Trane TechnologiesThe views expressed in the “Market View” are those of the author and do not necessarily represent the views of the Aluminum Association

The Aluminum Association

2Industry Activity

May 29, 2020

May 28 – Preliminary estimates indicate that aluminum demand in the United States and Canada (shipments by domestic producers plus imports) totaled an estimated 6,412 million pounds through the first quarter of 2020, a decrease of 11.0 percent from the year-to-date 2019 total. Demand for semi-fabricated (mill) products totaled 4,713 million pounds, off 8.6 percent. Apparent consumption (demand less exports) in domestic markets totaled an estimated 5,871 million pounds, a decline of 7.9 percent year-to-date.

May 29 – Aluminum net shipments (including exports) by domestic U.S. and Canadian facilities totaled an estimated 1,154 million pounds during April, a decrease of 42.8 percent from the April 2019 total of 2,018 million pounds. Shipments of aluminum mill products fell 28.6 percent from the previous year to 1,001 million pounds, while shipments of aluminum ingot for castings, exports and destructive uses declined 75.2 percent year-over-year, totaling 153 million pounds. Year-to-date in 2020, preliminary producer shipments totaled an estimated 6,793 million pounds, 17.1 percent below the like-2019 total of 8,190. April inventory levels totaled an estimated 3,488 million pounds, falling nine-tenths of one percent from the level a month ago, and declining 3.8 percent year-over-year.

0

500

1,000

1,500

2,000

2,500

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.

Estimated Producer Shipments(Millions of Pounds)

2019 2020

The Aluminum Association Not Seasonally Adjusted

0

500

1,000

1,500

2,000

2,500

3,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Estimated Aluminum Demand(Millions of Pounds) 2019 2020

The Aluminum Association Not Seasonally Adjusted

The Aluminum Association

3Economic Activity

May 29, 2020

May 26 – Sales of new single-family houses in April 2020 were at a seasonally adjusted annual rate of 623,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is six-tenths of one percent above the revised March rate of 619,000, but is 6.2 percent below the April 2019 estimate of 664,000. The median sales price of new houses sold in April 2020 was $309,900. The average sales price was $364,500. 400

450

500

550

600

650

700

750

800

U.S. Residential Sales(000 of Single-Family Homes)

U.S. Houses Sold 6 Mo. Moving Avg.

U.S. Census Bureau Seasonally Adjusted Annual Rate

May 27 – According to the RV Industry Association, RV shipments totaled an estimated 7,197 units in April 2020, a decrease of 82.1 percent from the 40,243 units shipped in April 2019. Towable RVs, led by conventional travel trailers, totaled 5,155 units for the month, a decrease of 81.5 percent compared to last April's total of 27,815 units. Motorhomes finished the month with just 694 units, down 84.7 percent compared to the April 2019 total of 4,525 units. Year to date, RV shipments have totaled an estimated 107,601 units, a decrease of 23.3 percent from the 140,219 units shipped in the first four months of 2019.

6.5

0.7

0

10

20

30

40

50

60

Wholesale RV Shipments(000 of Units)

Towable Motorhome

RV Industry Association Not Seasonally Adjusted

May 25 – According to the American Institute of Architects (AIA), following last month’s precipitous decline, billings at architecture firms sank even lower in April, as the COVID-19 pandemic continued to have a severe impact on firm business. The ABI score declined to 29.5, a new all-time low for the index (a score below 50 indicates decreasing billings), with more than half of responding firms reporting a further decline in their firm billings from March to April.

The ABI serves as a leading economic indicator that leads nonresidential construction activity by 9-12 months.

51.2 51.3 51.950.5

29.525

30

35

40

45

50

55

60

Architecture Billings Index (ABI)

Source: AIA Seasonally Adjusted

The Aluminum Association

4Economic Activity Continued…

May 29, 2020

May 28 – U.S. real gross domestic productdecreased at an annual rate of 5.0 percent in the first quarter of 2020 according to the “second" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2019, real GDP increased 2.1 percent. BEA emphasized that the "second" estimate is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the decrease in real GDP was 4.8 percent. The decline in first quarter GDP was, in part, due to the response to the spread of COVID-19, as governments issued "stay-at-home" orders in March. With the second estimate, a downward revision to private inventory investment was partly offset by upward revisions to personal consumption expenditures (PCE) and nonresidential fixed investment.

2.0 2.3 2.53.1

2.0 2.1 2.1

-5.0-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

Real GDP: Percent Change from Preceeding Quarter (1Q 2020 - Second Estimate)

U.S. Bureau of Economic Analysis Seasonally Adjusted Annual Rates

May 28 – The U.S. Bureau of Labor Statistics reported that in the week ending May 23, the advance figure for seasonally adjusted initial claimswas 2,123,000, a decrease of 323,000 from the previous week's revised level. The 4-week moving average was 2,608,000, a decrease of 436,000 from the previous week's revised average. Over the last two months, initial claims have totaled 40.8 million. The insured unemployment rate was 14.5 percent for the week ending May 16, while the there were 21.1 million continuing unemployment claims.

An initial claim is a claim filed by an unemployed individual after a separation from an employer.

150

1,150

2,150

3,150

4,150

5,150

6,150

7,150

8,150

Source: US. Employment and Training Administration/FRED

Unemployment Insurance Initial Claims(Thousands)

Last 52 Weeks

The Aluminum Association

5Economic Activity Continued…

May 29, 2020

May 29 – Statistics Canada reports that real GDP in Canada declined 7.2 percent in March, following four months of growth. COVID-19 related measures such as mandatory closures of non-essential businesses, schools and public institutions, and travel restrictions affected all segments of the Canadian economy. Overall, 19 out of the 20 sectors saw declines in March. Total manufacturing output contracted 6.5 percent to its lowest level since the second half of 2016, as many factories were shut down or faced sharply reduced demand during the second half of the month. Durable manufacturing dropped 11.1 percent as all subsectors fell.

180

185

190

195

200

205

1,800

1,840

1,880

1,920

1,960

2,000

Canadian Real Gross Domestic Product (chained to 2012 Canadian dollars)

All industries

Manufacturing (R. axis)

Statistics Canada Seasonally Adjusted Annual Rate

May 29 – Statistics Canada report that Canada’s Industrial Product Price Index (IPPI) declined 2.3 percent in April, primarily due to lower prices for refined petroleum products (-22.0%). The IPPI excluding energy and petroleum products edged up slightly (+0.1%) m/m. Alumina and aluminum production prices fell 4.5 percent, and are off 10.6 percent from a year ago. The overall IPPI declined 6.0 percent during the 12-month period ending in April, primarily due to a 44.8 percent decrease in prices for energy and petroleum products.

112.3

95.0

90

95

100

105

110

115

120

125

Canada Industrial Product Price Index2010=100

Statistics Canada Not Seasonally Adjusted

Industrial Product Price Index

Alumina and aluminum production/processing

This report is based on information reported to the Association by participants, which is aggregated by the Association. While the Association believes that its statistical procedures and methods are reliable, it does not warrant the accuracy or completeness of the data. All data contained herein are subject to revision. For further information, contact Ryan Olsen, V.P. Business Information and Statistics at 1-703-358-2984 or email rolsen@aluminum.org. © The Aluminum Association, Inc. All rights reserved.

The Aluminum Association

6Energy

May 29, 2020

-40

-20

0

20

40

60

80

Crude Oil Near-Month Futures (WTI & Brent)(U.S. dollars per barrel)

Brent

WTI

CME Group Inc.

May 29 – On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $35.49/bbl on Friday, May 29, up $2.24 (+6.7%) from last Friday's close of $33.25/bbl. U.S. oil futures advanced for the fifth consecutive week as traders eyed developments in the U.S. relationship with China, and as another drop in U.S. oil rigs suggested further domestic production declines. Active U.S. oil-drilling rigs declined for the eleventh straight week, falling by 15 (222) and declining by 578 from the level a year ago. Brent Crude on London's ICE Futures exchange also advanced, reaching $37.84/bbl (+7.7%). Friday's spread between the two was $2.35/bbl, up from last week's spread of $1.88/bbl.

May 28 – The U.S. Energy Information Administration (EIA) reported that natural gas spot prices were mixed this report week (Wednesday, May 20 to Wednesday, May 27). The Henry Hub spot price fell from $1.83 per million British thermal units (MMBtu) last Wednesday to $1.72/MMBtu.

At the New York Mercantile Exchange (Nymex), the June 2020 contract expired at $1.722/MMBtu, down 5¢/MMBtu from last Wednesday. The July 2020 contract price decreased to $1.886/MMBtu, down 2¢/MMBtu from last Wednesday. The price of the 12-month strip averaging July 2020 through June 2021 futures contracts declined 1¢/MMBtu to $2.451/MMBtu.

The Aluminum Association

7U.S. Dollar

May 29, 2020

May 22 – According to the most recent release by the Federal Reserve Board, the Trade Weighted U.S. Dollar Index closed at 122.66 on Friday, May 22, a decrease of 1.1 percent from last week's level of 123.98. The Index decreased for the third time in the last four weeks and fell back below it's 30-day moving average. Over the last six months, the Index has advanced 4.9 percent, while it has increased 5.6 percent over the last 12 months.

The Trade Weighted U.S. Dollar Index is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a broad group of major U.S. trading partners.

7.13

6.20

6.30

6.40

6.50

6.60

6.70

6.80

6.90

7.00

7.10

7.20Chinese Yuan to US Dollar

Chinese Yuan to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

1.40

1.20

1.25

1.30

1.35

1.40

1.45

1.50Canadian Dollar to US Dollar

Canadian Dollars to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

107.50

104.0

106.0

108.0

110.0

112.0

114.0

116.0Japanese Yen to US Dollar

Japanese Yen to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

1.09

1.06

1.08

1.10

1.12

1.14

1.16

1.18

1.20

1.22US Dollar to Euro

U.S. Dollars to One Euro

30 Day Moving Avg.

Federal Reserve Board

122.66

105.00

110.00

115.00

120.00

125.00

130.00

Trade Weighted U.S. Dollar Index: Broad, Goods and Services(2006 = 100)

Trade Weighted U.S. Dollar Index

30 Day Moving Avg.

Federal Reserve Board

The Aluminum Association

8The Aluminum Association, founded in 1933, works globally to aggressively promote aluminum as the most sustainable and recyclable automotive, packaging and construction material in today’s market. The Association represents North America and foreign-based primary producers of aluminum, aluminum recyclers, producers of semi-fabricated products and foundries as well as suppliers to the industry or distributors or jobbers.

The Aluminum Association's statistical programs provide industry information on primary aluminum production, new orders of mill products, industry shipments, end use market estimates, inventories, recycling and foreign trade on a monthly, quarterly and annual basis. Special surveys provide data on specific subjects such as primary capacity, flat roll capacity, inventories and castings shipments. Custom reports are available on a for-fee basis. Web briefings are also available upon request.

Industry OverviewAluminum Statistical Review (Annual Fact Book)Aluminum Highlights (Weekly)Aluminum Situation (Monthly)Summary of Producer Shipments and Inventories (Monthly)

Primary AluminumPrimary Aluminum Production – U.S. and Canada (Monthly)Primary Installed Capacity (Annual)Shipments of Primary Aluminum by Form (Quarterly)

Mill ProductsIndex of Net New Order Receipts for Aluminum Mill Products (Monthly)Can Stock Shipments (Monthly)Extruded Products Shipments and Press Utilization (Monthly)Flat Roll Capacity (Annual)Forging and Impacts Shipments (Monthly)Rod, Bar, and Wire Shipments (Monthly)Sheet and Plate Shipments (Monthly)

End UseExtrusion Shipments by End Use (Quarterly)Fin Stock Shipments by End Use (Quarterly)Foil Shipments by End Use (Monthly)Sheet and Plate Shipments by End Use (Quarterly)

CastingsU.S. Foundry Castings Shipments (Quarterly)Canada Foundry Castings Shipments (Annual)

RecyclingNew Can Stock (Class) Scrap Receipts (Monthly)Used Beverage Can Reclamation (Annual)

Foreign Trade (based on government customs data)Summary of North American (U.S. & Canada) Imports and Exports by Commodity (Monthly)U.S. Import Dashboard (Monthly)U.S. Aluminum Import Monitor - Section 232 (Monthly)Foreign Trade Online Database - U.S., Canada and Mexico Exports & Imports of Aluminum (By Commodity, by Country)

For a complete list of statistical publications and reports visit our bookstore.

May 29, 2020