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The US Midwest P1020 premium fell to 17.5-18.25 ¢/lb this week, the first drop below 18 ¢/lb since the 10% Section 232 import tariffs were put into effect. The fall in premiums comes as the market continues to sort out the impacts of the Canada tariff exemption. Australia, also exempt from Section 232 tariffs, has become one of the largest exporters of remelt ingot into the US in 2019, representing 21% of seaborne imports compared to 1.6% of imports a year ago. However, US unwrought aluminum imports continue to fall – with year to date seaborne imports down 26% y/y as of July 21. Based on month to date imports, July is expected to have the lowest monthly volume of US unwrought aluminum imports since November 2015.

The SHFE price has rallied 1% over the past few weeks, rising from RMB13,750 /t on 8 July to RMB13,895 /t on 26 July. The rally has been led by a relatively stronger LME price, better-than-expected Chinese June trade, and a rumouredstricter winter cut policy for 2019-2020. However, aluminium demand remains seasonally soft. The Chinese auto sector has been contracting over the past 12 months. Having reviewed the latest data trends and market intelligence from our customers and CRU’s offices in China, we have downgraded our forecasts for 2019 and 2020. This downgrade pushes our growth estimates for Chinese aluminium consumption in 2019 down to 1.9%.

Aluminum Highlights

Week Ending: July 26, 2019An update on industry activity and economic indicators

Market ViewBy: Doug Hilderhoff, Principal Analyst, Head, CRU North American Aluminum

The views expressed in the “Market View” are those of the author and do not necessarily represent the views of the Aluminum Association

This report is based on information reported to the Association by participants, which is aggregated by the Association. While the Association believes that its statistical procedures and methods are reliable, it does not warrant the accuracy or completeness of the data. All data contained herein are subject to revision. For further information, contact Ryan Olsen, V.P. Business Information and Statistics at 1-703-358-2984 or email rolsen@aluminum.org. © The Aluminum Association, Inc. All rights reserved.

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2Economic Activity

July 26, 2019

July 24 – Sales of new single-family houses in June 2019 were at a seasonally adjusted annual rate of 646,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.0 percent above the revised May rate of 604,000 and is 4.5 percent above the June 2018 estimate of 618,000. The median sales price of new houses sold in June 2019 was $310,400. The average sales price was $368,600. 300

350

400

450

500

550

600

650

700

750

U.S. Residential Sales(000 of Single-Family Homes)

U.S. Houses Sold 6 Mo. Moving Avg.

U.S. Census Bureau Seasonally Adjusted Annual Rate

July 26 – U.S. real gross domestic product increased at an annual rate of 2.1 percent in the second quarter of 2019 according to the “advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 3.1 percent. BEA emphasized that the "advance" estimate is based on source data that are incomplete or subject to further revision by the source agency. The deceleration in real GDP in the second quarter reflected downturns in inventory investment, exports, and nonresidential fixed investment. These downturns were partly offset by accelerations in PCE and federal government spending.

3.0

1.92.2

3.5

2.9

1.1

3.1

2.1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Real GDP: Percent Change from Preceeding Quarter (2Q 2019 - Advance Estimate)

U.S. Bureau of Economic Analysis Seasonally Adjusted Annual Rates

The Aluminum Association

3Global Activity

July 26, 2019

July 15 – According to preliminary estimates from the National Bureau of Statistics of China, the gross domestic product (GDP) of China increased 6.3 percent in the second quarter of 2019 compared to a year earlier, down slightly from the 6.4 percent pace in the previous quarter (Q1 2019). The result was “the slowest pace since at least 1992, and economists widely expect Beijing to step up efforts to stimulate growth” (article). GDP in Q2 rose 1.6 percent q/q, compared with growth of 1.4 percent in Q1 2019.

7.5

7.0

6.7

6.9

6.7

6.56.4 6.4

6.3

6.0

6.2

6.4

6.6

6.8

7.0

7.2

7.4

7.6

7.8

8.0

China GDP at Constant Prices(Y/Y Percent Change)

Source: National Bureau of Statistics

July 22 – According to data collected by the International Aluminium Institute, the global primary aluminum production rate totaled an estimated 63.8 million tonnes in June 2019, an increase of three-tenths of one percent over the revised May 2019 rate, but off 1.6 percent from the June 2018 rate. Actual production in June totaled an estimated 5.2 million tonnes, also off 1.6 percent y/y. Through the first half of 2019, global production has reached an estimated 31.6 million tonnes, five-tenths of one percent below the like-2018 total. The estimated annual production rate in North America (U.S. and Canada) rose 8.4 percent y/y to 4.0 million tonnes. In China, the annual production rate reached 35.6 million tonnes, off 3.1 percent y/y, while the rate in the RoW advanced three-tenths of one percent y/y to 27.9 million tonnes.

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

24,000

26,000

28,000

30,000

32,000

34,000

36,000

38,000

40,000

42,000

(% Share)(Kmt)

Global Annual Rate of Primary Aluminum Production, w/NA Share

ROW (L. Axis) China (L. Axis) N.A. (R. Axis)

Source: IAI and AA

The Aluminum Association

4Energy

July 26, 2019

40

45

50

55

60

65

70

75

80

85

90

Crude Oil Near-Month Futures (WTI & Brent)(U.S. dol lars per barrel)

Brent

WTI

CME Group Inc.

July 26 – On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $56.20/bbl on Friday, July 26, up $0.57 (+1.0%) from last week's close of $55.63/bbl. U.S. crude oil prices had a modest gain for the week as rising U.S. output moved to offset cuts by members of OPEC and its allies, while worries mount over global economic growth. Active U.S. oil-drilling rigs fell by 3 to 776, the fourth consecutive weekly decline. Compared to last year, oil rigs have contracted by 85. Brent Crude on London's ICE Futures exchange closed the week up to $63.46/bbl(+1.6%). Friday's spread between the two was $7.26/bbl, up from last week's spread of $6.84/bbl.

July 25 – The U.S. Energy Information Administration (EIA) reported that natural gas spot prices fell at most locations this report week (Wednesday, July 17, to Wednesday, July 24). Henry Hub spot prices fell from $2.38/MMBtu last Wednesday to $2.22/MMBtu.

At the New York Mercantile Exchange (Nymex), the price of the August 2019 contract decreased 8¢, from $2.304/MMBtu last Wednesday to $2.220/MMBtu. The price of the 12-month strip averaging August 2019 through July 2020 futures contracts declined 7¢/MMBtu to $2.394/MMBtu.

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5U.S. Dollar

July 26, 2019

July 12 – According to the most recent release by the Federal Reserve Board, the Nominal Broad Dollar Index closed the week at 127.63 on Friday, July 19th, a n increase of one-tenth of one percent from the previous week's close of 127.55. The result is the second weekly increase in the Index over the last three weeks. Despite the growth, the Index has now remained below its 30 day-moving average for the seventh consecutive week. Over the last six months, the Index has advanced seven-tenths of one percent, while it's up 2.1 percent over the last 12 months.

The nominal broad dollar index is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a broad group of major U.S. trading partners.

6.88

6.20

6.30

6.40

6.50

6.60

6.70

6.80

6.90

7.00

7.10Chinese Yuan to US Dollar

Chinese Yuan to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

1.31

1.20

1.22

1.24

1.26

1.28

1.30

1.32

1.34

1.36

1.38Canadian Dollar to US Dollar

Canadian Dollars to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

107.78

104.0

106.0

108.0

110.0

112.0

114.0

116.0Japanese Yen to US Dollar

Japanese Yen to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

1.12

1.10

1.12

1.14

1.16

1.18

1.20

1.22

1.24

1.26US Dollar to Euro

U.S. Dollars to One Euro

30 Day Moving Avg.

Federal Reserve Board

115

120

125

130

135

Weekly Nominal Broad Dollar Index(1997 = 100)

Broad Index 30 Day Moving Avg.

Federal Reserve Board

The Aluminum Association

6The Aluminum Association, founded in 1933, works globally to aggressively promote aluminum as the most sustainable and recyclable automotive, packaging and construction material in today’s market. The Association represents North America and foreign-based primary producers of aluminum, aluminum recyclers, producers of semi-fabricated products and foundries as well as suppliers to the industry or distributors or jobbers.

The Aluminum Association's statistical programs provide industry information on primary aluminum production, new orders of mill products, industry shipments, end use market estimates, inventories, recycling and foreign trade on a monthly, quarterly and annual basis. Special surveys provide data on specific subjects such as primary capacity, flat roll capacity, inventories and castings shipments. Custom reports are available on a for-fee basis. Web briefings are also available upon request.

Industry OverviewAluminum Statistical Review (Annual Fact Book)Aluminum Highlights (Weekly)Aluminum Situation (Monthly)Summary of Producer Shipments and Inventories (Monthly)

Primary AluminumPrimary Aluminum Production – U.S. and Canada (Monthly)Primary Installed Capacity (Annual)Shipments of Primary Aluminum by Form (Quarterly)

Mill ProductsIndex of Net New Order Receipts for Aluminum Mill Products (Monthly)Can Stock Shipments (Monthly)Electrical Conductor Shipments (Monthly)Extruded Products Shipments and Press Utilization (Monthly)Flat Roll Capacity (Annual)Foil Shipments (Monthly)Forging and Impacts Shipments (Monthly)Rod, Bar, and Wire Shipments (Monthly)Sheet and Plate Shipments (Monthly)

End UseExtrusion Shipments by End Use (Quarterly)Fin Stock Shipments by End Use (Quarterly)Foil Shipments by End Use (Monthly)Sheet and Plate Shipments by End Use (Quarterly)

CastingsU.S. Foundry Castings Shipments (Quarterly)Canada Foundry Castings Shipments (Annual)

RecyclingNew Can Stock (Class) Scrap Receipts (Monthly)Used Beverage Can Reclamation (Annual)

Foreign Trade (based on government customs data)Summary of U.S., Canada and Mexico Imports and Exports (by Commodity), MonthlyForeign Trade Online Database - U.S., Canada and Mexico Exports & Imports of Aluminum (By Commodity, by Country)

For a complete list of statistical publications and reports visit our bookstore.

July 26, 2019