Deficit or surplus
When production exceeds demand, markets (DBB) are in a surplus condition. A deficit occurs when demand exceeds production. According to most estimates, including those of producers such as Alcoa (AA), aluminum markets were in a deficit in 2016. Let’s see what senior aluminum executives had to say about the aluminum industry’s 2017 balance.
Alcoa expects global aluminum markets to be in a surplus in 2017. The company expects China’s aluminum surplus to be 2.1 million–2.3 million metric tons.
Excluding China, the world is expected to be in a deficit of 1.5 million–1.7 million metric tons, resulting in a global surplus of 0.4 million–0.8 million metric tons, in 2017. However, Alcoa expects largely balanced markets in bauxite and alumina.
Norsk Hydro (NHYDY) expects global aluminum demand to rise 3%–5% YoY (year-over-year) in 2017. The company expects Chinese aluminum demand to rise 4%–6% YoY in 2017, and it expects China’s primary aluminum production to rise 7%–9% in the year. Norsk Hydro expects aluminum markets to be in balance this year, with expectations of a small surplus.
However, aluminum company RUSAL expects global aluminum markets to be in a deficit of 1.1 million metric tons in 2017. According to RUSAL, global aluminum markets were at a deficit of 0.6 million metric tons in 2016.
We should remember that the aluminum industry’s 2017 balance could eventually boil down to China’s demand-supply equation. We’ll discuss this in detail in the next article.