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Analysis of the Current Development Status of the Overseas Primary Aluminum Industry in 2017
2026-03-12
The growth rate of overseas aluminum production has slowed, with a clear trend toward relocation to developing regions. According to statistics, total overseas primary aluminum output in 2016 reached 28.793 million tonnes, representing a six-year compound annual growth rate of just 0.89%. Among these, North and South America experienced the largest declines due to challenges related to power supply and costs, with output falling by a cumulative 647,000 tonnes between 2010 and 2016. By contrast, energy-abundant, lower-cost regions such as Central and Eastern Europe and the Gulf states have been the main drivers of production growth, adding 1.934 million tonnes over the same six-year period.
Growth in Overseas Primary Aluminum Production Approaches Zero (in 10,000 tonnes)
Data source: Compilation of Publicly Available Information
According to statistics, overseas primary aluminum projects have collectively cut production by 5.7642 million tonnes since 2010, with the largest reduction—4.074 million tonnes—occurring from 2013 to 2015 due to the accelerated decline in aluminum prices.
In 2016, electrolytic aluminum consumption outside China grew steadily. In addition to the continued recovery in the construction sector, manufacturing—particularly the transportation sector—experienced rapid growth in electrolytic aluminum demand, providing strong support for overall consumption. According to forecasts, the global aluminum market deficit is expected to widen from 1.3 million tonnes in 2017 to 1.7–1.8 million tonnes in 2018.
Manufacturing Across the Globe, Except in China, Is Fully Recovering
Data source: Compiled from public sources
With demand picking up, the resumption of electrolytic aluminum production has become inevitable—but the broader positive implications deserve even greater attention. Recently, Alcoa and Rusal each announced plans to restart a small amount of electrolytic aluminum capacity. We believe that, against the backdrop of recovering demand, a measured resumption of production is entirely normal. This also suggests that the world’s leading aluminum producers have reached a degree of consensus on the onset of a new cycle, which carries significant positive implications.
For the global aluminum industry, under the backdrop of consecutive years of declining aluminum prices, the only viable option for survival is to phase out high-cost capacity and thereby flatten the cost curve. According to our calculations, the four-year average aluminum price from 2013 to 2016 was below US$1,900 per tonne, with the 2016 average plunging even lower to just US$1,611 per tonne. At current price levels—around US$1,900 per tonne—only projects that were shut down in 2016, along with some newly added capacity, are now being brought back on the agenda.
Further scenario analysis indicates that even if aluminum prices were to return to their levels of the past few years and previously idled electrolytic aluminum capacity were brought back online—assuming a 17% rebound in prices to US$2,100 per tonne—the maximum additional supply entering the market would still be only about 4.81 million tonnes. Moreover, given the substantial costs of restarting operations and the permanent closure of many smelters, the actual increase in supply would be far lower than 4.81 million tonnes. For global electrolytic aluminum demand, which stands at roughly 60 million tonnes and grows at an annual rate of 5%–8%, such a modest supply boost would have only a limited impact.
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