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Aluminum had a quiet week, with LME prices finishing the week down slightly at around $1,865 per metric ton. A solid US employment report, which showed job gains totaling 196,000 (a nice rebound from February’s disappointing 33,000 figure), and rumors of progress in US-China trade negotiations were not enough to offset weak numbers in the March IHS Markit Purchasing Manager Index (PMI) report.

The March PMI repot was disappointing, with sectoral data for aluminum using industries particularly discouraging. The headline aluminum index showed activity globally contracting for the fifth consecutive month, with the index’s March reading the weakest since May of 2009. Particularly worrisome in the March PMI report was the new orders data. Globally, new orders for aluminum using industries were the softest since March 2009. Of the three regions segmented in the report – Asia, Europe and the U.S. – Europe is the point of real weakness, though all three regions are now seeing new orders falling. The only hint of good news in the aluminum data was that production levels appear to have already adjusted to the downturn in orders such that further cuts in output are unlikely – unless orders continue to fall.

In other news, the US Commerce Department issued an affirmative preliminary determination in its countervailing duty probe against imported Chinese aluminum wire and cable products, finding subsidies range from 11.6% to 164.2%. The investigation was launched last September after US wire manufacturers Encore Wire Corporation and Southwire Company filed petitions with the US International Trade Commission claiming increased wire and cable import volumes were hurting the domestic industry.

Aluminum Highlights

Week Ending: April 5, 2019An update on industry activity and economic indicators

Market ViewBy: John Mothersole, Director of Research, Pricing and Purchasing Service – IHS Markit

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

Spring 2019 Aluminum Association Casthouse Safety WorkshopMay 14 and 15, 2019 in Riverside, California

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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2Industry Activity

April 5, 2019

March 28 – Aluminum imports of ingot, scrap and mill products into the U.S. and Canada (excluding cross-border trade) totaled 843 million pounds in January 2019, off 2.2 percent from the January 2018 total of 862 million pounds. Including scrap, which accounted for roughly 53.3 percent of reported aluminum exports in January, exports totaled 575 million pounds, up 10.7 percent over a year ago. Excluding scrap, exports totaled 268 million pounds, off 1.5 percent from last year. Exports of scrap increased 24.3 percent year-over-year. In total for 2018, imports were down 6.4 percent to 9,170 million pounds, while exports were up 13.1 percent to 7,345 million pounds.

Economic Activity

March 26 – The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced that privately-owned housing starts in February 2019 were at a seasonally adjusted annual rate of 1,162,000 units, a decline of 8.7 percent from the revised January 2019 rate of 1,273,000. Compared to a year ago, housing starts were off 9.9 percent from the February 2018 rate of 1,290,000. Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,296,000, off 1.6 percent from last month's 1,317,000, and 2.0 percent below the February 2018 estimate of 1,323,000. Year-to-date, privately-owned housing starts and authorized permits (not seasonally adjusted) were down 8.2 percent (revised) and up 1.7 percent compared to 2018, respectively.

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US Privately-Owned Housing: Authorized Permits & Starts(Thousands of Units)

Housing Starts Authorized Permits

U.S. Census Bureau Seasonally Adjusted Annual Rate

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Foreign Trade - U.S. and Canada(Mill ions of Pounds)

Not Seasonally AdjustedU.S. Bureau of the Census and Statistics Canada

Exports

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The Aluminum Association

3Economic Activity Continued…

April 5, 2019

March 27 – The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that total January exports of $207.3 billion and imports of $258.5 billion resulted in a trade deficit of $51.1 billion, down 14.6 percent from the revised December deficit of $59.9 billion. Exports during January rose $1.9 billion or nine-tenths of one percent over the revised December total, while imports fell $6.8 billion (-2.6%). A decrease in the import of capital goods, off $3.0 billion m/m, was largely responsible for the decrease in the deficit. Year-over-year, the goods and services deficit declined $1.9 billion, or 3.7 percent. Exports increased $6.1 billion or 3.0 percent. Imports increased $4.1 billion or 1.6 percent.

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U.S. Trade in Goods and Services($ Billions)

U.S. Census Bureau Seasonally Adjusted

Imports

Exports

Balance

January 2019Trade Deficit$51.1 Billion

March 28 – U.S. real gross domestic productincreased at an annual rate of 2.2 percent in the fourth quarter of 2018 according to the “third" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.4 percent. BEA emphasized that the third fourth-quarter estimate is based on more complete source data than were available for the "initial" estimate issued last month (2.6%). The general picture of economic growth remains the same; personal consumption expenditures (PCE), state and local government spending, and nonresidential fixed investment were revised down; imports, which are a subtraction in the calculation of GDP, were also revised down .

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Real GDP: Percent Change from Preceeding Quarter (4Q 2018 - Third Estimate)

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

March 29 – Sales of new single-family houses in February 2019 were at a seasonally adjusted annual rate of 667,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.9 percent above the revised January rate of 636,000 and is six-tenths of one percent above the February 2018 estimate of 663,000. The median sales price of new houses sold in February 2019 was $315,300. The average sales price was $379,600. 300

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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

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4Economic Activity Continued…

April 5, 2019

March 29 – Statistics Canada report that Canada’s Industrial Product Price Index (IPPI) rose three-tenths of one percent in February, mainly due to higher prices for energy and petroleum products (+3.1%). This followed a three-tenths of one percent decline the previous month. The IPPI excluding energy and petroleum products edged down one-tenth of one percent. Alumina and aluminum production prices increased for the second time in the last three months (+0.3%), but were off 5.6 percent from a year ago. The overall IPPI rose 1.2 percent during the 12-month period ending in February, after advancing 1.0 percent in January.

117.1

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Canada Industrial Product Price Index2010=100

Statistics Canada Not Seasonally Adjusted

Industrial Product Price Index

Alumina and aluminum production/processing

March 29 – Statistics Canada reports that real GDP in Canada rose three-tenths of one percent in January, fully offsetting the declines in November and December 2018. The rise was widespread as 18 of 20 industrial sectors were up. Goods-producing industries increased six-tenths of one percent, led by growth in manufacturing and construction. Services-producing industries rose two-tenths of one percent, as all but one sector increased. Total manufacturing output increased 1.5 percent in January, the first increase in the last three months, with growth widespread across subsectors as both non-durable (+1.9%) and durable manufacturing rose (+1.2%).

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Canadian Real Gross Domestic Product (chained to 2012 Canadian dollars)

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Manufacturing (R. axis)

Statistics Canada Seasonally Adjusted Annual Rate

April 1 – The U.S. Census Bureau of the Department of Commerce reported that the annual rate of construction spending during February 2019 totaled an estimated $1,320.3 billion, seasonally adjusted, an increase of 1.0 percent m/m, and 1.1 percent over the February 2018 estimate of $1,305.5 billion. Residential construction ($546.5 billion seasonally adjusted annual rate) rose seven-tenths of one percent m/m, but was off 3.6 percent y/y. Nonresidential construction was at a seasonally adjusted annual rate of $773.8 billion, an increase of 1.2 percent over January (+4.8% y/y). Year-to-date construction spending totaled $181.9 billion, 1.4 percent above the $179.4 billion in 2017.

400

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U.S. Value of Construction Put in Place ($USD in billions)

Nonresidential Residential

U.S. Census Bureau Seasonally Adjusted Annual Rate

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5Economic Activity Continued…

April 5, 2019

April 2 – Preliminary data published by Automotive News indicated that U.S. light-vehicle sales totaled 1.606 million units in March 2019, a decline of 3.1 percent from the March 2018 total of 1.658 million units. The daily sales rate in March was 59,471 over 27 days, five-tenths of one percent above the March 2018 rate of 59,201 (28 days). March’s seasonally adjusted annual rate of 17.42 million units was also five-tenths of one percent above last month's rate 17.33 million units. Year-to-date in 2019, U.S. sales were an estimated 3.989 million units, 3.2 percent below the 2018 year-to-date estimate of 4.123 million units.

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U.S. Light Vehicle Sales(Thousands of units)

Light Vehicles 12-Month Average

WardsAuto & Automotive News Not Seasonally Adjusted

April 5 – Total nonfarm payroll employment increased by 196,000 in March, the U.S. Bureau of Labor Statistics reported. The unemployment ratewas unchanged at 3.8 percent, with notable job gains occurring in health care and in professional and technical services. Manufacturing employment fell for the first time since July 2017, falling by 6,000 jobs. The average monthly change for the sector now stands at 17,400 additional jobs over the last 12 months. In total, manufacturing employment has increased by roughly 210,300 jobs over the last year. -30

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Month-to-Month Change in Manufacturing Employment(Thousands)

M/M Change 12mo. Moving Avg.

U.S. Bureau of Labor Statistics Seasonaly Adjusted

April 4 – The U.S. Bureau of Labor Statistics reported that in the week ending March 30, the advance figure for seasonally adjusted initial claims was 202,000, a decrease of 10,000 from the previous week's revised level. This is the lowest level for initial claims since December 6, 1969 when it was 202,000. The 4-week moving average was 213,500, a decrease of 4,000 from the previous week's revised average.

An initial claim is a claim filed by an unemployed individual after a separation from an employer. 150

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Source: US. Employment and Training Administration/FRED

Unemployment Insurance Initial Claims(Thousands)

Last 52 Weeks

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6Global Activity

April 1 – The headline Markit Mexico Manufacturing PMI registered 49.8 in March, down from a 13-month high of 52.6 in February. The reading highlighted a renewed deterioration in business conditions across the sector. Owing to a strong performance in February, the PMI averaged 51.1 in the opening quarter of 2019, compared to 50.0 in Q4 2018. Total inflows of new work stagnated, while a marginal and slower upturn in export sales was registered. As a result, firms reduced employment, input purchasing and output. There were also renewed declines in inventories of both pre and post-production items. Input cost inflation softened for the fourth month running, while charges fell for the first time in nearly four-and-a-half years.

April 1 –The Markit Canada Manufacturing Purchasing Managers’ Index (PMI) posted 50.5 in March, down from 52.6 in February. The latest reading signaled the slowest upturn in operating conditions across the manufacturing sector since September 2016. Weaker production growth was a key factor. Output volumes increased at the slowest pace for almost two-and-a-half years. Survey respondents cited fragile customer demand, especially from export markets. Some manufacturers also noted efforts to streamline their inventories of finished goods by cutting back on production schedules. March data pointed to a fractional decline in new orders received by manufacturing firms, which ended a 29-month period of sustained expansion.

April 5, 2019

April 1 – The Markit final U.S. Manufacturing Purchasing Managers’ Index (PMI) posted 52.4 in March, down from 53.0 in February. The moderate improvement in the health of the manufacturing sector was the weakest since June 2017. Nonetheless, the rate of job creation remained solid despite broadly unchanged levels of outstanding business. Meanwhile, cost pressures eased further as the rate of input price inflation softened for the fifth successive month. Output charges also rose at a slower pace. On the price front, input price inflation softened further to the slowest since August 2017. Where a rise in costs was reported, goods producers linked this to higher raw material prices, stemming from the ongoing impact of tariffs.

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7Global Activity Continued...

April 1 – The final Markit Eurozone Manufacturing PMI posted a level of 47.5, down from 49.3 in February and its lowest level since April 2013. The PMI has been on a broadly downward trajectory since reaching a series record high at the end of 2017. The underperformance of the manufacturing economy was closely linked to a deteriorating demand environment. According to the latest data, orders books contracted to the greatest degree since the end of 2012. Export orders were down at the sharpest rate since August 2012. The noticeable drop in demand inevitably weighed on production, with output falling at a marked and accelerated rate (the greatest in nearly six years).

April 1 – The headline Nikkei Japan Manufacturing PMI recorded 49.2 in March, slightly up from February’s 48.9, but still below the no-change mark of 50.0, thus signaling a further slowdown. Latest data rounded off the worst quarterly performance in Japan’s manufacturing sector since Q2 2016. There were little signs of economic improvement since February, with demand easing at a rate similar to the 32-month record seen in the previous month during March. New orders from domestic and international clients had reportedly both fallen further. Overall exports fell moderately during March. In response, production volumes were cut across the Japanese manufacturing sector for the third straight month.

April 5, 2019

April 1 – The Caixin China General Manufacturing PMI posted 50.8 in March, up from 49.9 in February, to signal the first improvement in the health of China’s manufacturing sector for four months. Although consistent with only a marginal pace of improvement, the index reading was the highest seen since July 2018. Firms signaled slightly quicker rises in output and overall new work, while employment increased for the first time in over five years. Firmer demand conditions led to a softer fall in purchasing activity, while inventories of inputs rose slightly for the first time since last November. Average input costs rose slightly, though companies generally passed this on to clients in the form of higher selling prices.

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8Energy

April 5, 2019

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

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CME Group Inc.

April 5 – On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $63.08/bbl on Friday, April 5, up $2.94 (+4.9%) from last week's close of $60.14/bbl. Oil prices increased on "persistent themes of Saudi (if not OPEC+) production discipline, sanctions on Iranian/Venezuelan exports, and seemingly resilient demand.” Active U.S. oil-drilling rigs increased by 15 last week to 831, the first increase in the last seven weeks. Compared to last year, oil rigs have increased by 23. Brent Crude on London's ICE Futures exchange closed the week up at $70.34/bbl(+4.1%). Friday's spread between the two was $7.26/bbl, down from last week's spread of $7.44/bbl.

April 4 – The U.S. Energy Information Administration reported that natural gas spot prices were mixed this report week (Wednesday, March 27 to Wednesday, April 3). Henry Hub spot prices rose from $2.66 per million British thermal units (MMBtu) last Wednesday to $2.67/MMBtu.

At the Nymex, the April 2019 contract expired last Wednesday at $2.713/MMBtu. The May 2019 contract decreased to $2.677/MMBtu, down 4¢/MMBtu from last Wednesday. The price of the 12-month strip averaging May 2019 through April 2020 futures contracts declined 4¢/MMBtu to $2.846/MMBtu.

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9U.S. Dollar

April 5, 2019

March 29 – According to the most recent release by the Federal Reserve Board, the Nominal Broad Dollar Index closed the week at 127.56 on Friday, March 29th, increasing four-tenths of one percent from the previous week's close of 127.12. The Index rose for the fourth time in the last five weeks. With the result, the Index remained just above its 30 day-moving average for the fifth consecutive week. Over the last six months, the index has advanced 1.5 percent, while it's up 8.4 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.

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Weekly Nominal Broad Dollar Index(1997 = 100)

Broad Index 30 Day Moving Avg.

Federal Reserve Board

The Aluminum Association

10The 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.

April 5, 2019