Aluminum giant sees trade war impact on use

Bloomberg

The trade war between the US and China that’s clouded the global growth outlook will have a lasting negative effect on aluminum demand, Norsk Hydro ASA Chief Executive Officer Hilde Merete Aasheim said.
The Oslo-based company pared its demand growth forecast for a second time this year, echoing the dimming outlook painted by top US producer Alcoa Corp. Russian giant United Co Rusal chimed in with similar comments in a trading update on Friday that warned on aluminum demand for the second half.
“With the turmoil that’s going on now, it’s hard to see how it will play out,” Aasheim said in a phone interview. Asked if she sees aluminum demand bouncing back, she said “not at
this point.”
Hydro owns Alunorte, the world’s largest refinery that produces alumina — the key raw material for the metal.
Aluminum in London has tumbled 13 percent in the past year amid mounting concerns trade frictions will dim growth prospects, hurting consumption of the metal used in airplanes, automobiles. The International Monetary Fund said the world economy will expand 3.2 percent this, weaker than forecast in April and the slowest pace since the financial crisis.
The metal for delivery in three months fell 1.3 percent to $1,803 a metric ton on the London Metal Exchange. “One thing that hurts global growth over time is uncertainty, it affects peoples’ ability and willingness to do capital investments and at the end of the day affects individuals ability and willingness to consume,” Hydro Chief Financial Officer Eivind Kallevik said. “It doesn’t mean that if all trade wars are cleared up tomorrow that it would be a great day the day after, but it would certainly send things in a different direction.”

Capacity Stalls
About 12 percent off smelters are operating at a loss, while capacity additions in China, the world’s top producer and consumer of the metal, have stalled due to low prices, Rusal said in its second quarter results. The is despite aluminum being in deficit over the first half.
Oslo-based Hydro predicted that this year’s aluminum demand will grow by 1 percent to 2 percent, compared with a forecast range of 1 percent to 3 percent in April. The company cited signs of weakness in some market segments and warned of downside risks to its outlook.
Hydro expects its Alunorte facility in Brazil to boost alumina output to as much as 95 percent of capacity by December, from a range of 80 percent to 85 percent now, Aasheim said.
The refinery is close to returning to normal operations after a local court ordered it to cut output to 50 percent of capacity last year.
The company’s legal troubles in the South American nation began in early 2018 when heavy rains allegedly caused waste water to leak into local water supplies.