Hydro: Global aluminium demand growth up 5% for 2015

In connection with the release of its Q2 figures on Tuesday, the Norwegian aluminium group Hydro reported on the market development including an outlook for the upcoming months. Below, a summary:

Primary aluminium

Global primary aluminium consumption increased by 15% to 14.8m tonnes in Q2 compared with Q1 2015. Compared with Q2 2014, global demand increased by 5%. Global demand growth for 2015 is expected to be around 5%. Global demand (excluding China) increased by 5.8% compared with Q1 and was 2.1% higher compared with Q1 2014. Annualized consumption amounted to 28.2m tonnes for the quarter. Corresponding production amounted to 26.3m tonnes. This was the same level as in Q1 2015 and up 0.7% from Q2 2014, driven by the ramp-up of new production capacity in India and some announced restarts in Europe. Global demand for primary aluminium (excluding China) is expected to grow 2-3% in 2015.

Aluminium consumption increased seasonally by 25.7% to 7.7m tonnes in China compared with Q1 and was up 7.1% compared with Q2 of last year. Compared with Q2 2014, aluminium production increased 13.7%. Ramp-up of new capacity continued in the Northwest regions, while closures in Eastern regions have been more limited.

Shanghai Futures Exchange (SHFE) prices declined 0.9% compared with Q1. European demand for extrusion ingot, sheet ingot and primary foundry alloys in Q2 2015 was slightly higher compared with the same period in 2014. Product premiums have fallen following the decline in standard ingot premiums. The decline in standard ingot premiums throughout the quarter is expected to impact developments for value added premiums also going forward.

Rolled products

European demand for flat rolled products increased by around 2% compared with Q1 2015 mainly due to seasonality and improved demand in the general engineering market segment. Demand growth was at the same level compared with Q2 of the previous year.

Demand for automotive products was higher compared with Q1 despite lower car production, primarily due to the increasing substitution of steel by aluminium for automotive body sheet. Despite a slight seasonal increase, building and construction market demand was low in Southern Europe in particular, following somewhat improved market conditions in Q1. The foil market showed a healthy demand growth, influenced by improved consumer sentiment and restocking activities. Demand growth in beverage can and general engineering markets was solid. General engineering was positively influenced by a somewhat reduced import pressure as the euro weakened. Market demand in the third quarter is expected to be stable.

Extruded products

Demand for extruded products in North America increased by 4% compared with the previous quarter, due to seasonal variations in demand and strong markets. Compared to the same quarter of the previous year, demand grew 8%, due to strong automotive and truck demand and a ramp-up of residential building and construction activity.

In Europe, extruded products demand seasonally increased 5% compared with the previous quarter. Demand is showing signs of improvement compared to the same quarter of the previous year, but weaker building and construction market is, to a large degree, offsetting most other segments. Demand for extruded products is expected to seasonally weaken in Europe going into Q3, compared with Q2, while in North America demand is expected to remain stable. When comparing with the same quarter last year, demand in Europe in Q3 is expected to improve slightly, while the strong development is expected to continue in North America.

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