Global aluminium

industry overview

John Hannagan
Chairman UC RUSAL Australia
May 2014

Aluminum consumption forecast strong growth

through to 2018
Primary Aluminium consumption

Key regions
78

+50 mln.t

37

41

45

48

52

55

58

61

64

66

34

The NA consumption forecast at 3% growth

on strong auto demand and stable property
markets development

28

2003

2008 2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f

World ex-China

2023f

China

Primary aluminium demand growth in 2014 vs 2013

World
Ex.China

6%
3%

China

10%

India

5%

Middle East
Asia ex,China

2013s global aluminum demand growth rate

was at 6%. Expected another 6% growth in
2014. Largest contributors are still expected
to be China, ASEAN countries and the
United States

5%
3%

N.America

3%

Others

3%

Europe

3%

Source: CRU, UC RUSAL research

European consumption forecast in 2014

revised upwards to 3% from 2% mainly due
to robust growth forecast in Turkey and
recovering demand in Germany and GB
Expected strong growth in India, Middle East
and ex-China Asia at 3-4% on strong local
demand and continued growth in China as
well in developed counties
Increased car production, infrastructure
investments and home appliance purchases
in rural areas to drive further consumption
growth in China. Expected 10% aluminium
demand growth in 2014 despite GDP growth
slowdown

Global primary aluminium incremental

consumption will add 14 mln mt in 5 years
Ford F-150, aluminium frame

Population growth
and Urbanization

Construction
+ 4 mln mt

Electrical
+ 2 mln mt

Transportation
+ 5 mln mt

Al/Cu substitution

66 mln mt
by 2018
(+27%)

Income increasing

Consumer
durables
+1 mln mt

Consumer behavior
development

Source: CRU, UC RUSAL research

Automotive
production growth
Aluminium content in
cars increasing

Engineering &
Machinery
+ 1 mln mt

Packaging &
Foil stock
+ 1 mln mt

Industrialization,
Technological
development

Further development of downstream industry in

Middle East
Downstream 2015

750

750

600

600

450

450

300

KMT

KMT

Downstream 2012

165
250

kmt

215
310

175

300

400

150
0

WR

Bahrain UAE

Saudi Oman Kuwait Qatar

Arabia

Rolled

Extruded

Cast

58

90

+32

Secondary

Extruded

503

621

+118

EMAL 60 kmt (Billets)

Maaden 30 kmt (Billets)

Rolled

245

1,045

+800

Maaden 380 kmt (slab)

Sohar 160 kmt (liquid)

WR

425

500

+75

EMAL 50 kmt
(liquid, sow)

WR

Cast

Saudi Oman Kuwait Qatar

Arabia

Rolled

Extruded

Cast

Total

1,231 2,256 +1,025

Downstream growth will be priority for Middle East in

upcoming years in utilization of excess local primary metal
supply and reduction in aluminium products import

ME primary aluminium balance

4 500

Metal Source

160

80
Bahrain UAE

Add

310

175
150

2012 2015

Kmt

Currently according to While Gulf Cooperation Council

(GCC) nations now account for about 10% of the worlds
primary aluminium production but they only produce around
3% of its downstream products, and have almost no
industry in the end-use sectors

4 300
4 100
3 900
3 700
3 500

As expected ME downstream production will almost double

by 2015 compared to 2012 production level from 1,2 mln.t
to 2,3 mln.t. With most dynamics in FRP production growth.

3 300
3 100
2 900
2 700
2 500
2012

2013

2014

2015

2016

2017

2018

This may potentially significantly increase local industry

demand in primary metal and thus reduce excessive supply
to open market and further improve aluminum balance

Further strong growth in aluminum downstream industry in ME to increase local primary metal demand
4

Source: Strategic Session 10-11 December 2013, Special Report by McKinsey & Company (ARABAL 2013)

Production ex-China declined on closure of

unprofitable capacities
Ex.China aluminum production

Announced & actual production cuts since 2012

Kt

kt
2300

21%

15%

913

647

100%

9%

13%

8%

2200
2100
2000

609

1900

313

1800
Alcoa

RUSAL

(1)

World excl China (IAI + CRU)

Klesch +
Ormet

Rio Tinto

280
Norsk Hydro

377

Others

% of total capacity

Operating capacity, cost and price

3 500

95%

$/t

LME cash

CRU FOC

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Jul-11

70%
Jan-11

1 000
Jul-10

75%

Jan-10

1 500

Jul-09

80%

Jan-09

2 000

Jul-08

85%

Jan-08

2 500

Jul-07

90%

Jan-07

3 000

Capacity utilization rate

Ex-China aluminum production by end of 2013 dropped by 0,7 mtpa

from beginning of 2011 well below top levels of 2008 and 2011
Producers react fast to aluminum price drops by cutting production
but continue to raise production including inefficient capacity when
the price recovers. This doesnt allow the price to be sustainable
Since 2012, all major producers have executed production cuts of
around 3 mtpa (around 5% of global capacity). 33% of the global
(Ex-China) production is estimated to be loss-making at the current
prices. As expected 1,5 mtpa more Ex.China capacity to be cut in
2014
Ex-China capacity utilization rate dropped below 75% level to crises
low level of 2009 on production cuts and more unused loss-making
capacity fully replicating past crises situation

Aluminum industry ex-China made sufficient capacity curtailments for sustainable upward trend in price
Source: Bloomberg, CRU, Companies announcements and reports
Notes: (1) UC RUSAL actual production cuts of 316,000 tonnes due in 2013;

Global aluminum stocks expected steady decline

in 2014 and beyond
Aluminum Ex.China total stocks
9 800

kt

LME registered stocks

kt
6000

9 600
5000
9 400

4000

9 200

3000

9 000

2000
1000

8 800
0
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14

8 600

CancelledWarrants

OnWarrants

Global aluminum stocks outside China decline steadily since beginning of 2012 by more than 1,1 mtpa YTD mainly due
to decline in off-warrant stocks, producers and consumers stocks supporting our view on tight physical market supply.
High physical market premiums also support this argument
High physical market demand , as expected, will make more metal outflow from LME locations mainly to off-warrart
stocks. Good indication of this is soaring canceled warrant stocks reaching 47% of total LME registered stocks
Whilst total stocks are relatively unchanged, the amount on warrant has significantly reduced. Suggests that deliveries
in have been reduced whilst warrants have been cancelled for delivery out.
We expect LME visible stocks continue steady decline in main LME locations Vlissingen & Detroit during 2014 and will
fall below 3,74 million by end of 2014 tonnes taking into consideration increasing physical market tightness.
As estimated total stocks are to decline by 2,7 mln.tonnes by 2015
Aluminum visible stocks will continue declining following off-warrant stocks decline on physical market deficit
6

Source: CRU, LME. UC RUSAL estimates

Upcoming projects doesn't compensate closing of

non- profitable capacities in 2014
Incremental Supply structure in 2014, ex-China
Ex-China

Production ex-China is
projected to go down by
89 kmt in 2014 vs 2013

-89

N.America

-382

Russia

-329

Oceania

-143

Others

Middle East projects come in form of VAP or as part of

liquid metal supply chain to integrated/cooperated
downstream industry
Development of the local downstream industry will allocate
previously exported metal for domestic market (Oman:
SOHAR / OARC; Mozambique: MOZAL / MIDAL; Saudi
Arabia: Maaden / Maaden rolling project; Australia:
TOMAGO / MIDAL, Canada / SURAL)

-180

Europe

-164

Middle East

679

India

Expectation of announcement about further cuts production

in Brazil due to increasing of domestic electricity prices to a
record of over $800 per MW/h

277

SE Asia

153

-600

Highlights 2014

-400

-200

200

400

600

800

Region

Smelter

Production
2013

Production
2014

Incremental

Comments

Saudi
Arabia

Maaden

190

550

+360 kmt

Alcoas
projection

UAE

EMAL

800

1100

+300 kmt

In full operation
from summer

Malaysia

Press
Metal

300

438

+138 kmt

India

Angul

310

416

+106 kmt

India

Hirakud

140

189

+49 kmt

India

Korba

250

309

+59 kmt

Shortage of fresh metal in the deficit

regions like North America, Europe and
SE Asia become more sizable

Delivery of new metal in Primary

ingots form to the LME warehouses is
projected to be reduced significantly

Strong demand coupled with capacity closures

generate a significant deficit from 2014
Ex. China aluminum balance

Deficit growth by region

kt

Mln mt

29

-188

0
CENTRAL & SOUTH AMERICA

-306
-200

28

INDIA

-400

27

2014F

-600
26

-948

-985
25

-1 135

2013

NORTH AMERICA
-800

2012

-1 104
-1 000

EUROPE

-1 199

24

-1 200
OTHER ASIA

23

-1 400
2012

2013

2014f

Production

2015f
Consumption

2016

2017

2018

-5 000

-4 000

-3 000

-2 000

-1 000

1 000

Balance (in kmt)

Aluminum consumption (Ex. China) is expected to grow at 4% CAGR in 2013-15 with consumption predicted to increase by 2 mln
tonnes during this period
More that 1,2 mln. tonnes of aluminum capacity (Ex. China) has been cut in 2013(according to official announcements) another
1-1,5 mln. tonnes as expected to be cut in 2014
This supports our view that the aluminum market (Ex.China) will be in deficit of 306K in 2013 to 1,2 mln.t. in 2014 and 1 mln.t. in
2015, supporting aluminum price growth
Most aluminum deficit growing regions are South East Asia, Europe and North America increasing further deficit in 2015
Russian Government is considering the opportunity of establishing up to a 1 million tonne state reserve facility in order to support
future consumption growth on domestic market

Continuing aluminum capacity curtailments & consumption growth will significantly improve balance in 2013-15
Source: CRU, UC RUSAL estimates

Aluminium premiums have bounced to record

highs on strong demand and tight supply
Aluminium premiums

Market premiums soared to record high on current physical

market tightness. Market premiums remain well supported
due to:

Supply and demand balance

Market to remain very tight, with estimated 455Kt

global deficit
Tradable commodity grade production to fall as
producers increase VAP output
Tight primary/secondary spreads to continue to
underpin the demand for primary aluminium

Attractiveness of cash and carry deals

Source: MB

Profitability of carry trade deals

Main exposure of the financier is the mark to market

value of the premium today vs end of holding period
Positions to be drip fed into the market over time,
should metal financiers choose to reduce their
exposure whilst preserving the premium value
Aluminium to continue to be drawn into low cost
storage locations and financed for as long as the
contango supports the trade

UC RUSAL believes that the broader industry context is

greatly supportive of the premiums paid in the market today
and for the foreseeable future

Global premiums to be supported by improved market fundamentals and strong financial demand
Source: LME, UC RUSAL estimate
(1) As of 01 03 2014

Aluminum price expected to rebound in 2014 and

beyond
Analysts balance projection versus actual data
US$/t
2 612

Ex.China balance versus real aluminum price

kt

US$/t
2 400

2 398

2 173

3100
2 079

2 019

1 945

1 867

1 865

1 850

2900

1 700

2700
2500
2300
Bearish forecast for 2014

Average global cash cost

Price in 2013

Today's price to fix in 2014

Aver. forecast for 2014

Average price in 2012

Marginal cash cost, ROW

Average price in 2010

Average price in 2011

LT price forecast

Bullish forecst for 2014

2100
1900
1500
Ex.China balance

LME price versus aluminum alloy price

3100

US$/t

2800
2500

LME/Alloy -$102/t

2200

1900
1600
1300
Apr-14

Oct-13

Jan-14

Jul-13

Apr-13

Jan-13

Jul-12

Alloy cash

Oct-12

Apr-12

Oct-11

Jan-12

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Oct-09

Jan-10

Jul-09

Apr-09

Jan-09

1000

LME cash

Current price

1700

2 000
1 500
1 000
500
-500
-1 000
-1 500
-2 000
-2 500
-3 000

Al real 2013 price

Real aluminum price at beginning of 2014 price level was

at a historical low despite improved market fundamentals.
Thus all signaling possibility of strong price rebound in
1H2014, opening a good opportunity for consumers and
financial investors to enter the aluminum price at an
attractive level
Current LME price is traded at USD102/t average
discount to aluminum alloy price since beginning of 2014
versus normal premium of USD116/t in average over
2009-13
Significantly improved market fundamentals and tight
market supply should support strong aluminum price
rebound

Current low level of aluminum price locked for 2014 guarantee an LME price below past levels & consensus
estimate
10

Source: Actual global balance is based on data from CRU, BrookHunt, Metal Bulletin and Aladdiny, UC RUSAL estimates for future Ex.China S/D balance, Harbor

China continued capacity and production

growth in 1H2014
Chinas operating capacity
Kt

27 292

-1 389

1 928

230

Chinese aluminium capacity utilization rate

28 063

Kt
33000
30000

90%
88%
88%

87%

27000
85%

86%

24000
84%
21000
82%

18000
15000

80%
2012

Capacity Dec
2013

Idled

New
commissioning

Resumed
capacity

Capacity Mar2014

In 2013 Chinese aluminium market was characterized by falling

SHFE price, increased pressure to operating capacities,
commissioning of large number of new capacities and strong
efforts by the Central government to control expansions and
regulate Al industry
In spite of weak prices majority of new projects already built in
China were commissioning with 1.9 Mt put into operation in
Jan-Mar 2014
Increasing cost pressure led to 1,4 Mt of capacities leaving the
market, but net capacity increase still reached 771 Kt. We
expect 2,5-3 Mt of new additional capacities are expected to be
commissioned in China in 2014, putting more pressure to
SHFE price
Up to 3 Mt of production are expected to be cut in 2014 due to
tight financial situation

Production

2013
Capacity

2014*
Average capacity utilization rate

* annul. production for 2014, utilization rate for January 2014

Al production in 2013 reached 25.1 mln.t with apparent

consumption of 25.48 mln.t, Chinese market faced a deficit of 339
kt
Al capacity increased to 31.37 mln.t, operating rate in Al industry
slump to 87%
Al production grew 10,9% while operating capacity showed
11,9% growth, installed capacity 11,6%
Unlike ex.China capacity utilization rate at 74% in January of 2014,
China keeps capacity utilization rate at 85% for the same period
China needs more aggressively to cut capacity to improve
aluminum balance and support aluminum price

Chinese aluminum market was facing deep transformation and imbalance in 2013 that will likely to continue in 2014
11

Source: UC RUSAL research, Aladdiny, Bloomberg

Notes: (1) VAT excluded

 leading

to SHFE price collapse and sharply

increasing industry losses
Chinese Smelting Cash Cost Curve evolution in 2013
Loss-making capacities in
Mar 2014 - 15.2 Mt (57%)

RMB/t

18000

China Aluminum Smelters Profit Margin

-27%

17000

SHFE Dec 2012, RMB 15224

SHFE Jun 2013, RMB 14641
SHFE Mar 2014, RMB 13112

16000
15000
14000
13000
12000
11000
10000
0

5000

10000

Cash cost, December 2012

15000

Cash cost, July 2013

20000

25000

Cash cost, December 2013

In 2013 Chinese Al smelting Cost curve underwent serious changes

it evolved to lower-cost position due to following factors:
- high-cost capacity left the market
- smelters engaged in captive PP construction thus reducing power
costs
- slump in coal price helped smelters operating captive PPs to
decrease power generation costs
- new capacities located in low-power price regions, entered the
market
- Drop of SHFE price during Jan Mar 2014 has made all previous
efforts of smelters on costs cutting insufficient
- ~ 15.2Mtpa (~57%) of capacities became unprofitable at the
average SHFE Cash price for Mar 2014 (RMB 13,112/t)

The SHFE aluminum cash price dropped by RMB 2555/t to

RMB12,565/t in Jan 2013 Mar. 2014 but recovered a bit in April,
showing 27% decrease from its peak in Jul 2011
Aluminum inventories in China started declining since May 2013
and by the end of November 2013 it fell by 659Kt to 1.297 Mt,
mostly triggered by increasing demand from downstream industries
and SRBs purchase. In April spot aluminium stockpiles declined for
the first time in over a year in China amid production cuts and the
demand growth.
The aluminum smelters in Central and Southern provinces are
under increasing pressure in 2014 due to falling aluminum price
while large amount of low-cost aluminum capacity go into
production in Xinjiang and other western regions

As expected China to cut up to 3 million tonnes of aluminium production in 2014

12

Sources:Aladdiny,SMM,MBandUCRusal Research

Positive signs of Chinese aluminum market in

March 2014
Daily average aluminum production vs capacity utilization rate

Monthly Primary Aluminum Fundamentals

According to Aladdinys data, Chinas daily average aluminum production in March 2014 fell by 5.3%M-M to 75.3 kt Annualized
production decreased by 1524 kt to 27.5 Mt in March on the monthly basis and rose by 2501 kt from March 2013
Capacity utilization fell to 83.8% in March from 88.8% in February 2014 and versus 90.5% in March 2013
The strong rise in apparent consumption and production decrease in March led to 26 kt supply deficit after big surplus in Jan-Feb
2014
Net operating capacity rise was only 771kt as of March 2014 due to 1,4 mln tonnes of capacity cuts. We expect this trend to be
continued with possibility of negative rise in 2H14

Chinese aluminum market recovery is underway with expected strong recovery in 2H2014
13

Sources: Aladdiny and UC Rusal Research

China State Council guidance on addressing severe

overcapacity and its impact on aluminum industry
Policy overview
On Oct-15, 2013 the State Council issued its guiding opinions ordering a halt in the construction of new capacity in sectors
burdened by excess production facilities in the steel, flat glass, cement, electrolytic aluminum and shipbuilding industries, in
particular

Projects where construction hadnt yet started should be canceled;

Projects under construction to be halted unless they receive central government approval
Barriers to entry and environmental standards will be two key indicators for phasing out old or adding new capacity
Banks have been ordered to write off some of the nonperforming loans on their books and prohibited to grant loans for new
projects in industries with overcapacity

On Nov-5, 2013 Chinas central ministries sent a stern message in support of the key State Council document implementation
According to Hu Zucai, deputy director of the NDRC, local governments will be held accountable regarding overcapacity.
Those who continue to violate these guidelines will be heavily punished

China aluminum balance 2012 - 2017

Kt 35 000

Measures in aluminum industry

0Kt
-100

30 000

-200

-220

25 000

-300

-339

20 000

-400
-500

15 000

-600

10 000

-700

5 000

-800

-750

-700
-800
-900

2013
Production

2014F

2015E

2016E

Apparent consumption

2017E
Balance

1 Eliminate prebaked anode cells (160,000A) before end of 2015

Power tariffs raise by 10% for AL smelters with AC power consumption

2 over 13,700kw*h/t and for capacities which fail to meet standards

before the end of 2015 - multi-step electricity pricing
Local governments are forbidden to introduce preferential electricity
3 price policies, cheap land, tax breaks . Measures should be taken to
relocate aluminum smelters to regions with abundant hydro power
Aluminum smelters are encouraged to sign long-term power supply

4 contracts with power plants

Chinese enterprises are encouraged to build aluminum smelters

5 overseas where energy is rich

Chinese aluminum growth will slow down, capacities will move to the North-western parts of the country, only
modern and integrated players will survive. China is not likely to have a surplus before 2015
15

Source: MIIT State Councils guidelines as of October 16, UC RUSAL research

Indonesian supply ban to hit 18 mln tonnes of Chinese

alumina production with rising bauxite cost
Bauxite reserves and production

Bauxite supply balance in China

Shanxi
Henan
Guizhou
Guangxi

Proven bauxite reserve in China amounts to 17.8 billion

tonnes, the inferred bauxite resource - 16.3 billion
tonnes, mostly in Shanxi, Henan, Guangxi, Guizhou and
Yunnan provinces.

Extractable reserves of 539 million tonnes (2012),

sufficient for 6-7 years of current domestic bauxite
consumption

Dominantly diaspore, with high alumina content but low

Al/Si ratio expensive to process

Over 400 deposits

Domestic bauxite production in 2013 is evaluated at

about 73-74 million tonnes in comparison to 18 million
tonnes in 2006.

China also is still one of the largest world bauxite

importers and its bauxite self-sufficiency rate in
2012-2013 was about 61-63%. Indonesian bauxite
import accounted for 70% of total

Chinas bauxite import rose to record 71.6 million tonnes

in 2013 (+79% YoY). Such a growth was stipulated by
bauxite stockpiling during the year before Indonesias
export ban implementation in Jan 2014.

Indonesian bauxite ban to increase Chinese aluminum cost by USD80-100/tonne through the alumina chain
15

Source: Ministry of Land and Resources, China Non-ferrous Metals Association, Aladdiny, SMM, China Customs, UCR research

Coupled with higher transportation costs as aluminum

industry relocation to the West
Despite cheaper power costs NW producers face higher
transportation costs and imported bauxite cost
Bauxite is shipped ~ 4,200 km from Indonesia to Shandong ports
Alumina is transported by rail ~ 3,500 km from Shandong to Xinjiang
Aluminium is transported by rail ~ 4,200 km from Xinjiang to customers
Xinjiang vs East China - additional transportation cost of 290USD/t

Heilongjiang

Jilin
Inner Mongolia
Liaoning
Beijing
Tianjin
Hebei

Xinjiang

Shanxi
Ningxia
Gansu

Shandong

Henan

Jiangsu

Shaanxi
Anhui

Qinghai
Hubei
Tibet
(Xizang)

Shanghai
Zhejiang

Sichuan

Jiangxi

Chongqing

Hunan

Fujian

Guizhou
Guangdong
Yunnan

Guangxi

Hainan

Developing Xinjiang as a smelting hub increases the overall distance of the bauxite-alumina-aluminium-market
supply chain from 4,000 km to 11,000km, 2/3 of which is by rail transport
116

Source: Aladdiny, UC RUSAL research

China to import more aluminum after 2015 lifting seaborne

alumina prices
Chinese alumina self-sufficiency

Installed alumina capacity in China, 2013

>15 Mt/a
10-15 Mt/a
5 -10 Mt/a
<5 Mt/a

China alumina balance, mln. mt

80

10

Alumina production in 2013 increased to 49 million tonnes

(+14% YoY). Utilization rate 80%.

75

Installed alumina capacity at the end of 2013 reached 60.9

Mln t/y, running capacity 54 Mln t/y.

65

70

8
7

60
6
55

Most of alumina production is concentrated in Shandong

(30%), Henan (23%) and Shanxi (22%) provinces.

50

45

Chinas alumina import fell to 3.8 million tonnes in 2013 from

5 Mt in 2012 but expected to grow to 5,5 Mt in 2014 and to 10
Mt by 2018. Significant aluminna import to China after 2015
will lift seaborne alumina prices

17

Source: Aladdiny, AsianMetal, UC RUSAL research

40
2012

2013

2014e

Consumption

2015f

2016f

Own production

2017f
Import

2018f

Chinese semis export influences ex.China semis market not

primary aluminum supply/demand balance
while a number of countries have already
introduced protective antidumping measures

China is a major net exporter of semis

(Kt)

3 200

(USD/t)

550
450

2 700

350

Products: Al wheels, Al foil,

Al radiators
Duty: 20.6%, 30%,61.4%

250
150

2 200

50
EU

-50
1 700

-150

USA

China

-250

Aluminium ingot
Aluminium scrap

Aluminium alloys
Net balance

Product: Al extrusions
Duty: 32.8%-33.3%

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Jul-11

Jan-11

Jul-10

Jan-10

Jul-09

Jul-08

Jan-09

1 200
Jan-08

-350

Aluminium semis
LME (rhs)

Australia
Product: Al extrusions
Duty: 3.8%-33%

Global aluminum semis consumption

80

RoW semis consumption

Chinese semis consumption
Chinese net-export of semis
Ex.China aluminum demand

(Mt)

70

(Kt)

30 000
29 000
28 000

60
27 000
50

26 000

40

25 000

30

24 000
23 000

20

22 000
10

21 000

20 000
2005

2006

2007

2008

2009

2010

2011

2012

2013e

12% of primary aluminium consumption in China accounts for

semis production, which is subject to further export
For 2011-2013 period Chinese semis net export grew just by 4%. In
Jan -Feb 2014 net semis export from China was down by 4% YoY.
Chinese semis export passes only 6% of global semis
consumption,
As for the end of 2012 Japan, South Korea, Malaysia and Thailand
accounted for the major part of Chinese alloys export
At the same time throughout 2009-2012 a number of regions, such
as USA, EU countries and Australia introduced protective
antidumping measures against Chinese aluminium semis
China is importing up to 2,7 million tonnes of aluminum scrap
annually, thus is a short of aluminum materials supply

Further growth of Chinese semis is limited by LME/SHFe price arbitrage and global protectionism measures
Source: Macquarie research, CRU, China Customs, Press releases

Global aluminum product balance (including

primary and secondary)
Total Al Balance model (including primary and VAP),kt
Supply
Demand
Balance

2012
67 406
67 268
139

2013
70 260
70 960
-700

2014
74 032
75 658
-1 626

2015
78 286
80 383
-2 097

2016
82 590
84 755
-2 164

2017
87 148
88 683
-1 536

2018
91 471
92 538
-1 068

Total Al Balance model by region , kt

NORTH AMERICA
CENTRAL & SOUTH AMERICA
EUROPE
CIS & RUSSIA
CHINA
INDIA
JAPAN, S.KOREA, SE ASIA
MIDDLE EAST & OTHER ASIA
AFRICA
AUSTRALASIA
Other
TOTAL

2012
133
737
-2 444
3 146
-2 410
-772
-5 013
3 215
1 135
2 086
326
139

2013
85
754
-2 806
2 834
-2 979
-617
-4 982
3 457
1 279
1 990
285
-700

2014
-464
643
-3 215
2 493
-2 945
-539
-5 041
4 085
1 240
1 816
300
-1 626

2015
-481
436
-3 456
2 619
-3 450
-280
-5 043
4 433
1 157
1 649
320
-2 097

2016
-671
427
-3 630
2 745
-3 385
-81
-5 183
4 437
1 148
1 688
340
-2 164

2017
-747
524
-3 785
2 878
-2 900
-7
-5 326
4 592
1 192
1 694
350
-1 536

2018
-651
524
-3 873
3 190
-2 650
-143
-5 406
4 763
1 156
1 673
350
-1 068

Global aluminium semis demand , kt

CRU
Total global semis production
Al/Semis conversion
of which
Rolled products
Extrusions
Castings
Wire & cable
Other

19

Source: CRU, UC RUSAL estimate

2012
65957
98,1%

2013
69525
98,0%

2014
73994
97,8%

2015
78583
97,8%

2016
83156
98,1%

2017
87000
98,1%

2018
90850
98,2%

20237
21634
15094
7343
1649

21394
22668
15815
7980
1668

22687
24074
16782
8714
1737

23977
25560
17911
9323
1812

25248
27105
18987
9940
1876

26325
28473
19977
10325
1900

27350
29700
21000
10700
2100

As expected total
aluminum market
balance to be in
significant deficit in
2014 and beyond
Secondary
aluminum will not
significantly
influence the
balance based on
current tightness
and more balanced
market growing
forward
EU, China and
other Asia regions
will remain the
most deficit
markets for raw
aluminum
(including primary
ingots and scrap)