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The aluminum market, like all commodity markets, is now pricing in a disruption to global manufacturing on the scale of what has been observed in China during the first quarter. The automotive sector was already hard hit by the disruptions in Hubei province and northern Italy even before the coronavirus outbreak became a full-fledged global pandemic. What this means is that aluminum consumption is certain to fall again this year after contracting in 2019, the first consecutive annual declines since the great recession in 2008-2009. The only question now is whether the decline in primary consumption this year exceeds the 6% plus decline recorded in 2009.

With demand weak, the added question for the industry is what kind of supply-side response will be forthcoming. With the LME price below $1,600 per metric ton, and therefore well into the industry’s cost curve, the pressure on producers is mounting. This growing stress is highlighted by China’s National Nonferrous Metals Industry Association request for government stockpile purchases to soak up inventory. Visible stocks on the Shanghai Futures Exchange have more than doubled since the end of December, with total exchange inventory, net of cancelled LME warrants, up 23% over the same span.

Cracks are appearing in the alumina market, and anode prices will soften as petcoke prices follow crude oil prices lower. But this relief will in no way offset the weakness in primary prices, leaving hard decisions looming.

Aluminum Highlights

Week Ending: March 20, 2020An update on industry activity and economic indicators

Market View

By: John Mothersole, Director of Research, Pricing and Purchasing Service – IHS MarkitThe views expressed in the “Market View” are those of the author and do not necessarily represent the views of the Aluminum Association

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.

American Aluminum an Essential Industry in a Moment of National Emergency

This week the Aluminum Association released a framework for policymakers developing economic stimulus and other programs in response to the COVID-19 pandemic. The document – “American Aluminum Jobs: Essential to the Nation” –underscores the essential nature of U.S. aluminum production, fabrication and recycling and calls for a number of measures to support the industry during the ongoing public health crisis.

The Aluminum Association

2Industry Activity

March 20, 2020

March 16 – New can stock (class) scrap receiptstotaled 49.8 million pounds during February 2020, a rise of 7.0 percent over the February 2019 total of 46.5 million pounds. Compared to the previous month, receipts were off 1.4 percent from the January 2020 total of 50.5 million pounds. Year-to-date class scrap receipts through February 2020 totaled 100.2 million pounds, down slightly from the year-to-date 2019 total of 100.3 million pounds.

March 19 – Shipments of Aluminum Powder and Paste to domestic markets by domestic producers, including imports by domestic producers, totaled 6.28 million pounds during February 2020, an increase of 40.5 percent over the February 2019 total of 4.47 million pounds. Compared to the previous month, shipments rose 3.0 percent over the January 2020 total of 6.10 million pounds. Year-to-date shipments through February 2020 totaled 12.38 million pounds, up 9.9 percent over the 2019 year-to-date total of 11.26 million pounds.

Compared to February 2019, shipments of powder to domestic markets jumped 49.4 percent to 5.67 million pounds, while shipments of pastedecreased 9.0 percent to 0.62 million pounds.

March 16 – Estimated shipments of Aluminum Forgings and Impacts by U.S. and Canadian producers totaled 24.6 million pounds during February 2020, a decrease of 19.6 percent from the February 2019 total of 30.6 million pounds. Compared to the previous month, shipments were off 7.2 percent from the January 2020 total of 26.6 million pounds. Year-to-date shipments through February 2020 totaled 51.2 million pounds, down 16.5 percent from the year-to-date 2019 total of 61.3 million pounds.

30

40

50

60

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

New Can Stock Scrap Receipts2019 2020*

The Aluminum Association Not Seasonally Adjusted

Millions of Pounds

15

20

25

30

35

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

Forgings and Impacts Shipments

2019 2020*

The Aluminum Association Not Seasonally Adjusted

Millions of Pounds

0

2

4

6

8

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

Domestic Shipments of Powder and Paste

2019 2020*

The Aluminum Association, Inc. Not Seasonally AdjustedThe Aluminum Association, Inc. Not Seasonally Adjusted

Millions of Pounds

The Aluminum Association

3Industry Activity Continued…

March 20, 2020

March 19 – Shipments of Aluminum Extruded Products (extruded shapes, pipe & tube, and rod & bar) by U.S. and Canadian producers totaled 417.0 million pounds during February 2020, a decrease of 5.9 percent from the February 2019 total of 443.1 million pounds. Compared to the previous month, shipments were down 3.1 percent from the January 2020 total of 430.5 million pounds. Year-to-date shipments through February 2020 totaled 847.4 million pounds, off 7.5 percent from the 2019 year-to-date total of 916.5 million pounds.

March 19 – Estimated shipments of Aluminum Drawing Stock, Bare Wire and Rod & Bar by U.S. and Canadian producers totaled 80.4 million pounds during February 2020, a decrease of 9.2 percent from the February 2019 total of 88.6 million pounds. Compared to the previous month, shipments were down 7.5 percent from the January 2020 revised total of 87.0 million pounds. Year-to-date shipments through February 2020 totaled 167.4 million pounds, off 12.3 percent from the 2019 year-to-date total of 191.0 million pounds. 50

60

70

80

90

100

110

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

Drawing Stock, Bare Wire, and Rod & Bar2019 2020*

The Aluminum Association Not Seasonally Adjusted

Millions of Pounds

250

300

350

400

450

500

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

Extruded Products Shipments2019 2020*

The Aluminum Association Not Seasonally Adjusted

Millions of Pounds

March 20 – Shipments of Aluminum Foil by U.S. and Canadian producers totaled 75.9 million pounds during February 2020, up 2.0 percent over the February 2019 total of 74.4 million pounds. Compared to the previous month, shipments were off 1.8 percent from the January 2020 total of 77.3 million pounds. Year-to-date shipments through February 2019 totaled 153.2 million pounds, down five-tenths of one percent from the 2019 year-to-date total of 154.0 million pounds. 20

30

40

50

60

70

80

90

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

Foil Shipments

2018 2019*

The Aluminum Association Not Seasonally AdjustedThe Aluminum Association Not Seasonally Adjusted

Millions of Pounds

The Aluminum Association

4Economic Activity

March 20, 2020

March 17 – The Federal Reserve Board announced that U.S. industrial production increased six-tenths of one percent in February, after declining five-tenths of one percent in January. Overall manufacturing output rose one-tenth of one percent m/m, with the production of durable goods down four-tenths of one percent. Year-over-year, manufacturing output declined two-tenths of one percent. At 109.6 percent of its 2012 average, the level of total industrial production in February was unchanged from a year earlier. Capacity utilization for the industrial sector increased 0.4 percentage point in February to 77.0 percent, a rate that is 2.8 percentage points below its long-run (1972–2019) average.

109.6

106.1

100

102

104

106

108

110

112

U.S. Industrial Production Indexes2012 = 100

Total

Manufacturing

Federal Reserve Board Seasonally Adjusted

March 16 – Preliminary data published by Ward's Automotive show that North American (Canada, Mexico, and the United States) light vehicle production totaled 1.40 million units during February 2020, an increase of 2.6 percent over the February 2019 total of 1.36 million units. The result left the six-month moving average 4.7 percent below the pace set a year ago. Year-over-year production rose 4.9 percent in Canada, while production in Mexico advanced 4.8 percent. U.S. production increased 1.5 percent year-over-year, totaling 919 thousand units. Year to date in 2020, North American light vehicle production totaled an estimated 2.81 million units, up 1.9 percent over the like-2019 total of 2.76 million units. US production through the first two months reached 1.86 million units, 2.9 percent over a year ago.

1,000

1,200

1,400

1,600

1,800

North American Light Vehicle Production(Thousands of units)

Light Vehicles 6-Month Average

Not Seasonally AdjustedWardsAuto & Automotive News

March 16 – Preliminary data published by the Automotive News Data Center show that medium and heavy truck sales in the United States totaled an estimated 34.8 thousand units during February 2020, a decline of 12.1 percent from the February 2019 total of 39.6 million units. The result left the three-month moving average 10.7 percent below the pace set a year ago. Class 4 (3.6k) and 5 (6.9k) trucks increased 9.0 and 23.0 percent y/y, respectively. Conversely, class 6 (4.4k), class 7 (4.3k), and class 8 (15.5k) trucks declined y/y. Year to date in 2020, U.S. medium and heavy truck sales totaled an estimated 68.1 thousand units, off 14.4 percent from the like-2019 total of 79.6 thousand units.

38.634.8

0

10

20

30

40

50

60

U.S. Medium & Heavy Truck Sales(Thousands of units)

Sales 3-Mo. Avg.

Automotive News Data Center Not Seasonally Adjusted

The Aluminum Association

5Economic Activity Continued…

March 20, 2020

March 17 – Builder confidence in the market for newly-built single-family homes fell two points to 72 in March according to the latest NAHB/Wells Fargo Housing Market Index (HMI). Sentiment levels have held in a firm range in the low- to mid-70s for the past six months. The HMI index gauging current sales conditions fell two points to 79, the component measuring sales expectations in the next six months dropped four points to 75 and the gauge charting traffic of prospective buyers also decreased one point to 56.

52

58

71 70

62

72

30

40

50

60

70

80

Housing Market Index (HMI)

National Association of Home Builders Seasonally Adjusted

March 18 – The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced that privately-owned housing starts in February 2020 were at a seasonally adjusted annual rate of 1,599,000 units, a decrease of 1.5 percent from the revised January 2020 rate of 1,624,000. Compared to a year ago, housing starts increased 39.2 percent over the February 2019 rate of 1,149,000. Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,464,000, falling 5.5 percent from last month's 1,550,000, but 13.8 percent above the February 2019 estimate of 1,287,000. Through February, privately-owned housing starts were up an estimated 35.4 percent, while authorized permits (not seasonally adjusted) have increased 16.0 percent.

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

US Privately-Owned Housing: Authorized Permits & Starts(Thousands of Units)

Housing Starts Authorized Permits

U.S. Census Bureau Seasonally Adjusted Annual Rate

March 17 – The total number of job openings rose to 7.0 million (+411,000) on the last business day of January, according to the U.S. Bureau of Labor Statistics. Manufacturing job openings increased 11.7 percent over December, but were off 5.9 percent from a year ago. Hires in the manufacturing sector fell 2.4 percent from the previous month, and were off 7.6 percent from the level reached a year ago. The spread between hires and separations in manufacturing remained in negative territory, as January hires were an estimated 326 thousand, while separations totaled 339 thousand (-0.9% m/m).

402

326339

200

250

300

350

400

450

500

550

SOURCE: U.S. BUREAU OF LABOR STATISTICS/FRED

U.S. Manufacturing Job Openings and Labor Turnover

Openings Hires Separations

The Aluminum Association

6Economic Activity Continued…

March 20, 2020

March 19 – The U.S. Bureau of Labor Statistics reported that in the week ending March 14, the advance figure for seasonally adjusted initial claimswas 281,000, an increase of 70,000 from the previous week's revised level. The 4-week moving average was 232,250, an increase of 16,500 from the previous week's revised average.

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

150

250

350

450

550

650

750

Source: US. Employment and Training Administration/FRED

Unemployment Insurance Initial Claims(Thousands)

Last 52 Weeks

March 19 – The Conference Board Leading Economic Index (LEI) increased slightly in February. Positive contributions from weekly manufacturing hours and average consumer expectations for business conditions offset declines in building permits and the ISM New Orders Index. In the six month period ending February 2020, the leading economic index increased 0.3 percent, slightly slower than the growth of 0.4 percent over the previous six months. The Conference Board CEI for the U.S., a measure of current economic activity, increased in February. The coincident economic index rose 0.7 percent between August 2019 and February 2020, about the same growth rate as over the previous six months.

The Aluminum Association

7

March 20, 2020

March 20 – According to data collected by the International Aluminium Institute, the global primary aluminum production rate totaled an estimated 64.5 million tonnes in February 2020, an increase of three-tenths of one percent over the January 2020 rate, and advancing five-tenths of one percent over the February 2019 rate. Actual production in February totaled an estimated 5.112 million tonnes. The estimated annual production rate in North America (U.S. and Canada) increased 1.6 percent m/m, and was up 2.6 percent y/y. In China, the estimated annual rate of production reached 36.3 million tonnes, up on both a monthly (+0.1%) and annual (+0.4%) basis. The rate in the RoW rose seven-tenths of one percent m/m, and increased five-tenths of one percent percent y/y.

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

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30,000

32,000

34,000

36,000

38,000

40,000

(% Share)(Kmt)

Global Annual Rate of Primary Aluminum Production, w/NA Share

ROW (L. Axis) China (L. Axis) N.A. (R. Axis)

Source: IAI and AA

Global Activity

The Aluminum Association

8Energy

March 20, 2020

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65

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85

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

Brent

WTI

CME Group Inc.

March 20 – On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $22.43/bbl on Friday, March 20, down $9.30 (-29.3%) from last week's close of $31.73/bbl. Oil futures posted the largest weekly loss since 1991, as economic stimulus plans failed to offset expectations for a steep fall in demand due to the coronavirus pandemic, and as Saudi Arabia and Russia oversupply the market. Active U.S. oil-drilling rigs recorded the largest weekly fall since April 2019, falling by 19 to 664. Active rigs have decreased by 160 rigs from a year ago. Brent Crude on London's ICE Futures exchange also fell significantly for the week, reaching $26.98/bbl (-20.3%). Friday's spread between the two was $4.55/bbl, increasing from last week's spread of $2.12/bbl.

March 19 – The U.S. Energy Information Administration (EIA) reported that natural gas spot prices fell at most locations this report week (Wednesday, March 11, to Wednesday, March 18). The Henry Hub spot price fell from $1.92 per million British thermal units (MMBtu) last Wednesday to $1.65/MMBtu.

At the New York Mercantile Exchange (Nymex), the price of the April 2020 contract decreased 27¢, from $1.878/MMBtu last Wednesday to $1.604/MMBtu, the lowest front-month price since March 2016. The price of the 12-month strip averaging April 2020 through March 2021 futures contracts declined 15¢/MMBtu to $2.083/MMBtu.

The Aluminum Association

9U.S. Dollar

March 20, 2020

March 13 – According to the most recent release by the Federal Reserve Board, the Trade Weighted U.S. Dollar Index closed at 120.71 on Friday, March 13, an increase of 3.3 percent from last week's level of 116.90. The result was the largest weekly increase since September of 2011 and, unsurprisingly, kept the Index above it's 30-day moving average for the eighth consecutive week. Over the last six months, the Index has advanced 3.3 percent, while it has increased 5.2 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.

7.01

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

1.45Canadian Dollar to US Dollar

Canadian Dollars to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

107.15

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

1.11

1.08

1.10

1.12

1.14

1.16

1.18

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1.22

1.24

1.26US Dollar to Euro

U.S. Dollars to One Euro

30 Day Moving Avg.

Federal Reserve Board

105.00

110.00

115.00

120.00

125.00

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

10The 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.

March 20, 2020