Aluminum demand to grow faster than supply in 2016, says Alcoa

By Paul Ploumis (ScrapMonster Author)

April 13, 2016 03:01:47 AM

SEATTLE (Scrap Monster): Aluminum major Alcoa has posted a weaker quarterly profit, hurt by weak commodity prices, rising strength in US dollar and closure on certain facilities as part of its plan to split business into two divisions. However, the company’s CEO stated that aluminum demand is likely to grow faster than demand during the year.

Meantime, Alcoa’s revenue dropped significantly by 15% during the first quarter of the year to $4.9 billion. Alcoa had posted revenue of $5.82 billion during the same quarter a year before. The first quarter net income tumbled by 92% over the previous year to $16 million. The company has cut its 2016 outlook for the global aerospace market. The shift to new platforms will lead to lesser growth in aerospace domain. The projection of aerospace growth in 2016 has now been lowered to 6%-8% when compared with the earlier projected growth rate of 8%-9%. However, Alcoa chairman and CEO Klaus Kleinfeld noted that aerospace market remains healthy overall.

Alcoa has revised its alumina demand growth from earlier 6% to 5%. The Chinese and North American markets are expected to post declines in demand growth. Growth in alumina demand may fall to 6.5% in China as against the earlier projected growth rate of 8%. Also, North American growth will be reduced to 4%. The global alumina deficit during 2016 is likely to total 1.4 million mt. Alcoa predicts the global consumption to touch 59.7 million mt and aluminum deficit to total around 1.1 million mt. It expects strong growth in demand from automotive markets, especially from North America.

Alcoa announced that it is on track to split into two entities by mid-2016. The upstream company, Alcoa, will take care of the company’s business related to bauxite-mining, alumina-refining, aluminum-production, casting and energy. The second entity named ‘Arconic’ will focus on making parts for automotive and aerospace industry.