Summary
> ROW’s primary aluminum production expected to expand in 2019 and 2020 by the most in over 30 years, by 2.8 million mton in total (or around 5.0% y/y each year) mainly due to expansions in the Middle East, India, Russia, and restarts in the Americas.
> HARBOR expects China’s aluminum production to expand in 2019 and 2020, by around 1.6 million mton each year or around 4.6% y/y, supported by: a) expansion projects in the pipeline (mainly in Guangxi, Yunnan, and Inner Mongolia), b) production restarts from winter curbs, and c) declining production costs.
> World smelting production costs continue to decline. Smelting cash costs have been pressured down almost uninterruptedly since peaking in May and HARBOR expects costs to keep falling as we anticipate a further drop in the price of key raw materials.
> Global production run-rates began 2019 somewhat subdued as gains from production expansions and restarts would not become evident until late Q1; once ramp-ups in China and the Middle East pick up speed and offset the negative effects from Chalco’s flexible operations in China and Alcoa’s production curtailments in Spain.