By Paul Ploumis
SEATTLE (Scrap Monster): Rusal has predicted 5% growth in aluminum demand during the current year. While announcing the results for the year ended 31st December, 2016, Vladislav Soloviev, CEO, Rusal stated that the company expects the global market deficit to increase from 700,000 tonnes in 2016 to nearly 1.1 million tonnes this year.
According to Rusal, global aluminum industry faced extremely challenging environment in 2016. The company’s revenue declined significantly, mainly on account of drop in LME aluminum prices during the course of the year. The revenues in 2016 recorded 8% decline from $ 8,680 million in 2015 to $ 7,983 million in 2016. It must be noted that average LME aluminum prices declined by 3.5% from $1,663 per tonne in 2015 to $1,604 per tonne in 2016. However, towards the end of the year, LME prices made strong comeback. The prices increased by over 14% during the fourth quarter alone.
The revenue from sales of primary aluminum and alloys has dropped by 9.1% to $ 6,614 million in 2016. The revenue had totaled $ 7,279 million in 2015. The revenue from sales of alumina increased by 4.5% year-over-year to $622 million during the year ended 2016. The alumina sales revenue had totaled only $595 million in 2015. The revenue from sales of foil has declined by over 11% to $240 million in 2016, as compared with $270 million in 2015. Meantime, the revenue from sales of other products, bauxite and energy services have decreased by 5.4% to $507 million, when compared with $536 million during the year prior to that.
The cost of alumina has decreased by 2.3% during 2016. Also, cost of bauxite has declined by almost one-fifth over the previous year. The cost of raw materials and other costs too declined by 2.6%. The total cost of sales declined by 2.3% to $6,070 million in 2016. The cost of sales had totaled $6,215 million in 2015.
The global aluminum demand totaled 59.7 million tonnes, growing modestly by 5.5% in 2016. The Chinese demand totaled 31.4 millon tonnes, accounting for nearly 53% of the world demand. The demand by the country has increased by 7.6% in 2016. The world countries excluding China recorded an yearly growth of 3.4% in 2016 to total 28.3 million tonnes.
In 2016, global aluminum supply rose by 3.6% to 59.0 million tonnes. The statistics released by IAI and CRU indicates that primary aluminum production in the world excluding China grew by 2.2% to 26.7 million tonnes, mainly on the back of growth in Asia, Malaysia and Eastern Europe. The ramping up of new capacities helped to lift Chinese aluminum production by 5.5% to 32.3 million tonnes in 2016.
Going forward, global aluminum demand is expected to grow by 5.0% to 62.7 million tonnes in 2017. The Chinese demand is forecast to grow by 6.7% year-on-year to 33.5 million tonnes. The demand in world countries excluding China is expected to record 3.3% yearly growth to 29.2 million tonnes, mainly driven by growth in Europe, the Middle East and Africa (EMEA), North America and Asian region. Global aluminum supply is expected to grow by 4.3% to total 61.6 million tonnes. The Chinese supply is expected to total 34.3 million tonnes, growing by 6% over the previous year. The supply from market excluding China will grow by 2.4% to 27.3 million tonnes. Consequently, global aluminum market will end in a deficit of 1.1 million tonnes in 2017, widening further by 400 million tonnes from 2016.
