Overseas Primary Aluminium Production Quarterly Review - Q1 2024

According to SMM statistics, the total production of primary aluminium outside China reached 7,461.5 kilo metric tonnes (kmt) in the first quarter of 2024. The Middle East contributed 23% or 1.72 million tonnes of the total. Following closely were Russia and India, producing 1,023 kmt and 1,025 kmt respectively, each accounting for about 14% of the total output in the rest of world. The average capacity utilisation rate for overseas regions was approximately 88%. Both the Middle East and India achieved full operating rates, while South America reported the lowest capacity utilisation rate at 64.7%.

Fig.1 Share of Overseas Primary Aluminium Production by Country/Region, Q1 2024

Fig.2 Q1 Production and Q2 Forecast by Country/Region, 2024

Fig.3 Capacity Utilisation Rate by Country/Region, Q1 2024

South America
The low utilisation rate in South America is mainly due to the inefficient smelter in Venezuela. The Venalum smelter have operated in a precarious condition since 2009 due to lack of investment and economic mismanagement, eventually shutting down completely at March 2019 following a power outage. However, Venalum announced a resumption in November 2021. But the utilisation rate eventually only returned to around 20% since then. Another Venezuelan smelter, Alcasa, has been running at a very low efficiency as well.
However, there was a 4.7% year-on-year increase in primary aluminium production in South America over the first quarter of this year. This increase was primarily due to Alcoa's Alumar smelter in Brazil, which restarted production in the second quarter of 2022 after announcing the restart of 447,000 tonnes of idle capacity in September 2021. According to the quarterly report of South32, another stakeholder, the restart of the Alumar smelter added only 5,000 tonnes per quarter. The facility's annual output for 2023 was approximately 238 kmt, and the year-end capacity utilisation rate recovered to about 58%. By the end of the first quarter of 2024, SMM estimates that the smelter's capacity utilisation rate improved to around 64%, with a production of approximately 71 kmt.

Russia
Russian primary aluminium production saw a slight increase of 2.2% year-on-year. This increase was mainly due to the gradual restart of UC RUSAL's Taishet smelter, which began in the first quarter of 2022 and had a capacity utilisation rate of about 37% by the end of 2023. Despite stable primary aluminium production at 3.8 million tonnes in 2023, UC RUSAL reported a 13.8% drop in alumina production due to war and sanctions, leading to increased production costs or a shortage of alumina supply. SMM predicts a slow production ramp-up at the Taishet smelter in 2024, estimating an output of 47,000 tonnes and a utilisation rate of about 44% in the first quarter.

Europe
Excluding Russia, primary aluminium production in the rest of Europe fell by 1.6% in the first quarter. This was largely due to the shutdown of the Neuss smelter in Germany, which ceased operations in March 2023 and produced approximately 29,000 tonnes in the first quarter of the year.

Australia
Australia's primary aluminium production decreased by 1.1% this quarter. The decrease followed Alcoa's announcement on March 15, 2023, to reduce a quarter of the capacity at its Portland smelter, which has a total capacity of 358,000 tonnes. This decision resulted in a quarterly production drop of 14,000 tonnes compared to the previous year.

India
India's primary aluminium production continued to rise, increasing by 1.6% year-on-year. Vedanta announced a 4% increase in primary aluminium production for the first quarter of 2024 (FY24-Q4), reaching 598,000 tonnes. NALCO also reported a record annual production of 463,000 tonnes for FY24 (From April 2023 to March 2024).

Other Asia
Primary aluminium production in the rest of Asia rose by 9.8% year-on-year, with growth mainly seen in Indonesia. In January, Inalum announced its intention to expand the capacity of its smelter in Kuala Tanjung to 600,000 tonnes by 2027. Inalum increased the total primary aluminium production target from 250,000 tonnes in 2023 to 274,140 tonnes in 2024. Besides Inalum, Huaqing Aluminium smelter started production at the end of March 2023. Production in the first quarter in 2024 increased by 50,000 tonnes compared to the same period last year.

North America
North America experienced the most significant drop in primary aluminium production, with a quarter-on-quarter decrease of 4%. This decline was mainly due to the closure of the New Madrid smelter on January 24, 2024, which completely ceased operations in the first quarter. The United States is now left with only four smelters, losing about 150,000 tonnes of primary aluminium. However, the restart of Alcoa's Warrick smelter partially offset this impact. The smelter began restarting a production line in Q4 2023 that had been shut down in July 2022 and dismantled a line that had been out of operation since 2016. Upon completion of the restart and dismantling, Warrick will operate three of four 54,000-tonne lines, producing 161,000 tonnes and achieving 75% capacity utilisation.
Additionally, on March 26th 2024, the U.S. Department of Energy announced a $500 million grant agreement with Century Aluminium to construct a new green primary aluminium smelter in the Ohio/Mississippi River Valley. This plant will use hydroelectric power and serve as a model for green industrial practices. The facility's planned capacity and start date are not yet revealed, but its completion could significantly expand the scale of the U.S. aluminium industry. Following the New Madrid closure, the annual output of the remaining four U.S. smelters is approximately 690,000 tonnes, with a capacity utilization rate of about 52%.