Alcoa forecasts higher aluminum demand amid surplus

US primary aluminum smelter Alcoa expects growing demand for aluminum in 2020 after a contraction in 2019 that contributed to its $1.1bn loss for the year.

Alcoa projects global aluminum demand to grow between 1.4-2.4pc, improving from a 0.2-0.4pc decline in 2019. The company expects more balanced supply-demand dynamics for alumina and bauxite raw materials in 2020, even as its view that primary aluminum will swing to a surplus.

The global market balance for aluminum is projected between a 0.6mn-1mn metric tonne (t) surplus in 2020, reversing a 0.9mn-1.1mn t deficit in 2019.

Shipments of bauxite are expected to rise as much as 3pc in 2020 to between 48mn-49mn dry metric tonnes (dmt) from a year earlier, while alumina volumes edge up as much as 1pc to 13.6mn-13.7mn t. Alcoa's outlook for primary aluminum shipments was up by as much as 8pc to 3mn-3.1mn t.

The company does expect weaker results in the first quarter driven by lower prices and seasonally lower volumes.

In addition, Alcoa kicked off a review of existing assets to "drive lower costs and sustainable profitability," which in part resulted in the sale of its waste treatment facility in Gum Springs, Arkansas on 2 January.

Alcoa's primary and flat-rolled aluminum shipments declined by 12pc to 718,000t in the fourth quarter from the same year earlier period. Full-year shipments totaled 2.9mn t, down by 13pc from 2018.

Average realized aluminum prices in the fourth quarter dropped by 13pc from the prior year to $2,042/t. Full-year average prices declined throughout 2019, falling by 14pc to $2,141/t from 2018.

Primary aluminum production in the fourth quarter fell by 7pc from a year earlier to 535,000t. Full-year production fell by 5pc year over year to 2.1mn t.

Quarterly third-party bauxite shipments fell by 6pc to 1.5dmt, while alumina volumes rose by 4pc to 2.5mn t.

Annual bauxite shipments increased to 6.2mn dmt from 5.7mn dmt. Shipments of alumina rose by 2pc to 9.5mn t in 2019.

Full-year bauxite production totaled 47.4dmt, a 3pc increase from 2018. Alumina production climbed by 3pc to 13.3mn t in 2019.

Revenues declined by 27pc to $2.4bn in the fourth quarter from a year earlier, while the company reversed a $51mn profit, losing $303mn. For 2019, Alcoa lost $1.1bn compared to a $250mn profit in 2018.

By Zach Schumacher