Alcoa Sees Aluminum Shifting to Deficit on Record Demandby
Alcoa Inc., the largest U.S. aluminum producer, expects the supplies of the metal will fall short of demand this year, shifting away from a surplus in 2015.
The aluminum market will have a deficit of 1.2 million metric tons in 2016 as demand increases 6 percent from last year to a record 60.5 million tons, New York-based Alcoa said Monday in its fourth-quarter earnings statement. In October, the company said it estimated consumption climbed by 6.5 percent in 2015.
Alcoa’s outlook for a shortage of supplies conflicts with estimates from analysts at Morgan Stanley and Harbor Intelligence who predict a surplus this year. The price of aluminum dropped 19 percent last year, the most since 2008, as a glut of production in China offset cutbacks in the rest of the world. Adding pressure was declining demand in the Asian country, the world’s biggest consumer, which headed for its slowest growth since 1990.
Still, production declines in the U.S. could help to support prices. Austin, Texas-based Harbor scaled back its forecast for this year’s surplus after Alcoa said it would halt operations at its Warrick smelter in Evansville, Indiana.
Alcoa, which is ready to forsake its trademark aluminum-making business when it splits itself in two later this year, forecast Chinese consumption growth at 8 percent in 2016. The company in October said 2015 demand grew by 9.3 percent. It still expects global aluminum demand to double between 2010 and 2020.