Following a year of strong growth in 2010 due to low base effects and government stimulus measures, the US aluminum and steel industries will experience a period of low growth in 2011 as federal spending is limited and the economy experiences stagnation, according to latest US Metals Report from BMI.
In 2010, US crude steel output grew 37.9% year-on-year (y-o-y) to 80.39mn tonnes while primary aluminium production fell 0.3% y-o-y to 1.72mn tonnes. Steel suffered from weakening market conditions in H210, which caused domestic crude steel output to fall 3.4% compared with H1, although output was still up 16.5% y-o-y.
The moderation in demand conditions impacted more on steel imports, which saw a falling trend in Q410, although on a y-o-y basis import growth was still strong, with total imports of semi-finished and finished steel growing 40% to 22.4mn tonnes for the whole year.
While aluminium performance was disappointing, in contrast to steel there were improvements in output in H210 with growth of 9.4% in Q3 and 6.9% in Q4. The improved performance did not return the industry to anywhere near pre-crisis levels, with monthly production a third down on 2008 averages. Output should strengthen in 2011 as smelters are brought back online.
Alcoa announced in January 2011 that it would restart idled potlines at three aluminium smelters in the US, increasing production by 137,000 tonnes over 2011 and 200,000 tonnes annually thereafter. The restarts should be completed during H111, but Alcoa will still have 674,000 tonnes per annum (tpa) of idle capacity remaining.
US aluminium producers will be wary of probable reversals in China's policy of cutting back production to meet year-end energy saving targets. The best the US can hope for is that the Chinese market will recover enough to be in a demand-supply balance, but this will still put the rest of the world in surplus and could mean the prolonged closure of some smelting facilities. |
