The last few years have been difficult for the resource space, and aluminum is just one commodity that’s faced headwinds.
However, momentum shifted for the aluminum market in 2016. Supply and demand improved, spurred by Donald Trump’s election as well as soaring coal prices. “Optimism is returning because of the potential that exists in the form of fiscal stimulus, infrastructure spending and tax cuts,” Robert Pavlik, chief market strategist at Boston Private Wealth in New York, told Reuters at the end of the year.
In terms of production, the US Geological Survey (USGS) notes that world aluminum output increased slightly in 2016, coming in at 57.6 million MT compared to 57.5 million MT the previous year. Here’s a look at the eight top aluminum-producing countries last year.
Mine production: 31 million MT
First on the list is China, which was responsible for more than half of global aluminum output in 2016. It put out 31 million MT, and also consumed a considerable amount of the metal — MarketRealist states that Chinese aluminum demand was “healthy” in 2016 due to higher automotive demand and “stimulus” provided by the government.
Looking ahead, Reuters says that the country’s 2017 aluminum production is off to a record start. It reached 2.95 million MT in January alone, representing year-on-year growth of nearly 19 percent. That said, Chinese aluminum supply may be somewhat restricted in the future due to the government’s five-year anti-pollution measures, introduced at the end of 2016.
Mine production: 3.58 million MT
Russia was the second-largest aluminum producer in 2016, but its output was significantly lower than China’s. Last year, it produced 3.58 million MT of aluminum, up from 3.53 million MT in 2015. Leading global aluminum producer RUSAL is headquartered in Moscow, and is the world’s sixth-largest aluminum company. It was taken over by China Hongqiao Group (HKEX:1378) in 2015.
Mine production: 3.25 million MT
Last year, Canada’s aluminum production increased to 3.25 million MT, up from 2.88 million MT in 2015. Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO), another leading global aluminum producer, has roughly 16 operations in the country. The US Geological Survey further states that Canada was the leading supplier of imported aluminum for the US in 2016.
Mine production 2.75 million MT
Aluminum production in India grew a fair amount in 2016. Last year, production totaled 2.75 million MT compared to 2.36 million MT in 2016. That said, aluminum use in the country declined by 50 percent in 2016. Hindalco Industries (NSE:HINDALCO), the world’s largest aluminum rolling company, is located in Mumbai and is said to be among the largest producers of primary aluminum in Asia.
5. United Arab Emirates
Mine production: 2.4 million MT
Aluminum production in the United Arab Emirates remained unchanged from 2015 to 2016; in both years, the country’s output was 2.4 million MT of aluminum.
Emirates Global Aluminium is one of the world’s five largest primary aluminum producers, and is the largest aluminum producer in the Middle East. According to Bloomberg, the company is considering an initial public offering on an Indian stock exchange. Last year, production at Emirates Global Aluminium increased by 4.2 percent to hit a record 2.5 million MT.
Mine production: 1.68 million MT
Australia’s aluminum production grew slightly last year, rising to 1.68 million MT from 1.65 million MT in 2015.
However, it’s possible that the country’s output will not increase this year. According to Reuters, Rio Tinto, which produces aluminum in Australia, will be making cuts to output and jobs at its Boyne aluminum smelter due to rising power costs. In total, it will reduce production by 45,000 MT this year, or about 8 percent.
Mine production: 1.23 million MT
Aluminum production in Norway also remained the same from 2015 to 2016. In both years, the country produced 1.23 million MT of aluminum. Norsk Hydro (OTCMKTS:NHYDY), a Norwegian aluminum and renewable energy company, has a number of plants in the country, as well as in Germany and Brazil.
8. United States
Mine production: 840,000 MT
Rounding out the list is the US, whose aluminum production took a substantial hit in 2016. Last year, the country produced just 840,000 MT of the metal, down from 1.587 million MT in 2015. According to the US Geological Survey, the US relied heavily on imports in 2016 due to the production decrease. US imports were up 18 percent in 2016 compared to 2015. Total aluminum exports from the US were also down 6 percent from 2015.
The US Geological Survey also notes that the US International Trade Commission has launched an investigation on the global aluminum industry and its impact on US producers. Among other things, the investigation will “examine industry characteristics, factors related to increased capacity, competitive strengths and weaknesses, recent trade trends, and the effect of government policies on production and trade of aluminum.”
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.