Market View. Aluminum Highlights. Week Ending: March 2, 2018 An update on industry activity and economic indicators. Follow us on:

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1 Market View Aluminum Highlights Week Ending: An update on industry activity and economic indicators By: Beau Walker, Department Leader, Market Intelligence and Projects Trane, Energy Supply Services The views expressed in the Market View are those of the author and do not necessarily represent the views of the Aluminum Association The NYMEX prompt-month natural gas contract rode a wave of volatility into February, ticking both 12-month high and low trades before moderating out. The prompt-month contract reached $3.662 per MMBtu on January 29, the day the February contract settled. This was the highest trade since December Once March became the prompt-month, the contract fell more than $1.00 per MMBtu in two weeks, bottoming out at $2.53 per MMBtu. Since then the contract has traded largely sideways as fundamentals have shifted from bullish to bearish. Weather has played the largest part in the downturn in prompt-month pricing. In February the eastern half of the United States lacked the extended periods of below-average temperatures seen in January, with some areas experiencing record-high temperatures for that time of year. The result was a downturn in heating demand, the largest demand sector during the winter months. Weather wasn t the only bearish factor though. Natural gas production remained near record levels, averaging 77.6 Bcf/d in January and expected to rise to 82.0 Bcf/d by the end of 2018, further pressuring the near-term gas prices lower. On top of that, the lowered demand allowed storage withdrawals to be smaller than those in January, lowering the deficit to year-ago levels and turning one of the more bullish factors for gas prices into a neutral factor. Only 515 Bcf of gas was withdrawn during February, compared to 929 Bcf in January. With April now the prompt-trading month and injection season nearing, traders will start looking toward early summer forecasts for market guidance. Prompt-month West Texas Intermediate (WTI) and Brent Crude oil both reached multi-year highs in late January, with WTI trading to $66.66 per barrel while Brent topped out at $71.21 per barrel. Saudi Arabia has been a primary driver in the bullish market. Saudi Energy Minister Khalid al-falih noted that $70 per barrel, as opposed to his previously stated $60 per barrel, is the level where Brent crude should be trading. In addition, Khalid al-falih also noted that Saudi production in the first quarter would be well below production quotas, further diminishing the global supply glut. Not all is bullish though as U.S. production has hit an all-time high of 10.3 MMbpd as of February 23, adding bearish sentiment to crude prices and helping stem the months-long crude price rally. 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 or rolsen@aluminum.org., Inc. All rights reserved. Follow us on:

2 Industry Activity 2 3,000 2, 2,000 1, 1,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Estimated Aluminum Demand (Millions of Pounds) Not Seasonally Adjusted February 27 Preliminary estimates indicate that aluminum demand in the United States and Canada (shipments by domestic producers plus imports) totaled an estimated 27,199 million pounds in 2017, up 2.9 percent over the 2016 total of 26,428. Demand for semi-fabricated (mill) products totaled 19,619 million pounds, up 5.4 percent. Apparent consumption (demand less exports) in domestic markets totaled an estimated 24,227 million pounds, up 3.9 percent year-over-year. February 28 Aluminum net shipments (including exports) by domestic U.S. and Canadian facilities totaled an estimated 2,030 million pounds during January, off two-tenths of one percent from the January 2017 total of 2,034 million pounds. Shipments of aluminum mill products increased 2.1 percent over the previous year to 1,359 million pounds, while shipments of aluminum ingot for castings, exports and destructive uses were off 4.6 percent year-over-year, totaling 671 million pounds. In total for 2017, preliminary producer shipments totaled an estimated 23,770 million pounds, an increase of eight-tenths of one percent over the 2016 total. January inventory levels totaled an estimated 3,225 million pounds, off one-tenth of one percent from the previous month but up 11.7 percent year-over-year. 2, 2,000 1, 1,000 0 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Estimated Producer Shipments (Millions of Pounds) Not Seasonally Adjusted U.S. Secondary Recovery and Exports of Aluminum Scrap (Millions of Pounds) Rec. '16 Rec. '17 Exports '16 Exports '17 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec U.S. Geological Survey, U.S. Census Bureau Not Seasonally Adjusted March 1 The U.S. aluminum industry purchased an estimated 695 million pounds of aluminum scrap during December 2017, according to aluminum recycling statistics published by the U.S. Geological Survey, Department of Interior, essentially unchanged from the December 2016 total. USGS estimates that recovery of aluminum and aluminum alloys totaled 622 million pounds, a decrease of nine-tenths of one percent year-over-year. In total for 2017, preliminary data indicate that recovery of aluminum from scrap totaled an estimated 8,009 million pounds, up 1.5 percent over the 2016 total of 7,893 million pounds. U.S. exports of scrap, not included in the government s consumption statistics, totaled 3,537 million pounds in 2017, up 18.3 percent over 2016.

3 Economic Activity U.S. Residential Sales (000 of Single-Family Homes) U.S. Houses Sold 6 Mo. Moving Avg. February 26 Sales of new single-family houses in January 2018 were at a seasonally adjusted annual rate of 593,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.8 percent below the revised December rate of 643,000 and is 1.0 percent below the January 2017 estimate of 599,000. The median sales price of new houses sold in January 2018 was $323,000. The average sales price was $382,700. U.S. Census Bureau Seasonally Adjusted Annual Rate February 28 U.S. real gross domestic product increased at an annual rate of 2.5 percent in the fourth quarter of 2017 according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent. BEA emphasized that the fourth-quarter "second" estimate is based on more complete source data than were available for the "advance" estimate issued last month. The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, residential fixed investment, state and local government spending, and federal government spending that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased Real GDP: Percent Change from Preceeding Quarter (4Q Advanced Estimate) 2.0 U.S. Bureau of Economic Analysis Seasonally Adjusted Annual Rates Statistics Canada Canada Industrial Product Price Index 2010=100 Industrial Product Price Index Alumina and aluminum production/processing Not Seasonally Adjusted February 28 Statistics Canada report that Canada s Industrial Product Price Index (IPPI) advanced three-tenths of one percent in January (115.2), following a decline of one-tenth of one percent in December (r). The increase in the IPPI mainly due to higher prices for energy and petroleum products. The IPPI excl. energy and petroleum products edged down one-tenth of one percent. Alumina and aluminum production prices increased nine-tenths of one percent from December, and were up 11.0 percent over a year ago. The overall IPPI rose 2.0 percent during the 12-month period ending in January, after posting a 2.3 percent increase in December.

4 Economic Activity Continued U.S. Census Bureau U.S. Value of Construction Put in Place ($USD in billions) Nonresidential Residential Seasonally Adjusted Annual Rate March 1 The U.S. Census Bureau of the Department of Commerce reported that the annual rate of construction spending during January 2018 totaled an estimated $1,262.8 billion, seasonally adjusted, essentially unchanged month-over-month, but up 3.2 percent over the January 2017 estimate of $1,223.5 billion. Residential construction ($529.9 billion seasonally adjusted annual rate) advanced two-tenths of one percent month-over-month, and was up 4.3 percent year-over-year. Nonresidential construction was at a seasonally adjusted annual rate of $732.9 billion in January, down one-tenth of one percent from December 2017 (+2.4% y/y). Construction spending in 2017 totaled a revised estimate of $1,232.9 billion, 4.0 percent above the $1,185.7 billion in March 1 According to WardsAuto, U.S. lightvehicle sales totaled 1.29 million units during February 2018, off 2.3 percent year-over-year. The daily sales rate in February was 53,986 over 24 days, 2.3 percent below the 2017 rate of 55,171 (also 24 days). Year-to-date 2018 sales totaled 2.44 million units, eight-tenths of one percent below the like total of 2.46 million. February s seasonally adjusted annual rate of 17.0 million units was slightly below the prior month s 17.1 million and like-2017 s 17.3 million. However, February s results marked the sixth straight month sales topped the 17-milion level. 1,800 1,600 1,400 1,200 1, WardsAuto U.S. Light Vehicle Sales (Thousands of units) Light Vehicles 12-Month Average Not Seasonally Adjusted Unemployment Insurance Initial Claims (Thousands) Source: US. Employment and Training Administration/FRED Last 52 Weeks March 1 In the week ending February 24, the advance figure for seasonally adjusted initial claims was 210,000, a decrease of 10,000 from the previous week's revised level. This is the lowest level for initial claims since December 6, The previous week's level was revised down by 2,000 from 222,000 to 220,000. The 4-week moving average was 220,, a decrease of 5,000 from the previous week's revised average. The previous week's average was revised down by from 226,000 to 225,. An initial claim is a claim filed by an unemployed individual after a separation from an employer.

5 Economic Activity Continued 5 1,775 1,750 1,725 1,700 1,675 1,650 1,625 Canadian Real Gross Domestic Product (chained to 2007 Canadian dollars) All industries Manufacturing (R. axis) March 2 Statistics Canada reports that real GDP in Canada, increased one-tenth of one percent in December, as 13 of 20 industrial sectors increased. This followed a 0.4% gain in November. The output of goods-producing industries edged down 0.1% in December, following 1.0% growth in November. Services-producing industries edged up one-tenth of one percent. Total manufacturing output fell seventenths of one percent month-over-month. Durablegoods manufacturing contracted five-tenths of one percent. Primary metal declined 1.6 percent as most industry groups decreased month-over-month. Statistics Canada Seasonally Adjusted Annual Rate

6 Global Trends 6 March 1 The Markit final U.S. Manufacturing Purchasing Managers Index (PMI) registered 55.3 in February, down slightly from 55.5 in January. Although below January s 34-month high, the overall improvement in operating conditions across the manufacturing sector was one of the strongest recorded since late Growth of manufacturing output remained solid in February, despite easing slightly to a three-month low. The sustained upturn in production was widely linked to greater client demand and increased order book volumes. New business received by manufacturers expanded at a faster pace in February, with growth reaching a 13- month high. March 1 The Markit Canada Manufacturing Purchasing Managers Index (PMI) eased to 55.6 in February from 55.9 in January and remained well above the 50.0 no-change threshold. Improving business conditions have been recorded in each month since March February data pointed to a relatively strong improvement in overall business conditions, which continued the positive start to 2018 for the manufacturing sector. Robust rises in output and new orders contributed to the sharpest pace of job creation for six months. At the same time, input buying increased to the largest extent since May 2011, driven by a combination of higher workloads and efforts to boost inventories. March 1 The headline Markit Mexico Manufacturing PMI fell from 52.6 in January to 51.6 in February. This signaled a modest improvement in the health of the sector that was the weakest seen for four months. Slower expansions in output, total new orders and employment underpinned the decline in the headline PMI figure. Softer client demand enabled businesses to tackle their work-inhand during February, as backlogs declined for the first time in four months. Meanwhile, shortages of certain products caused further hold-ups at suppliers, as average lead times lengthened for the seventh month in succession in February.

7 Global Trends Continued... 7 March 1 The Caixin China General Manufacturing PMI edged up to 51.6 in February, from 51.5 in January, to signal a further improvement in the health of the sector. Though only modest, the latest reading signaled the strongest improvement in operating conditions for six months. Although growth in production softened from that seen in January, total new work expanded at a slightly faster pace. Meanwhile, companies continued to shed staff as part of efforts to reduce costs, which contributed to a further rise in the level of outstanding work. Although the rate of input price inflation eased further in February, it remained sharp overall and remained much stronger than that seen for output charges. March 1 The headline Nikkei Japan Manufacturing PMI edged slightly lower to 54.1 in February, from 54.8 in January. This was consistent with a solid, albeit weaker, rate of improvement in business conditions for Japanese manufacturers. Output continued along an expansionary path during February, however the rate of growth slowed for the first time since July 2017 to a four-month low. Nonetheless, firms increased production during February in line with greater new business inflows. New order growth was strong overall, despite easing. Similarly, new business from abroad rose to a weaker extent following January s 92-month high. March 1 The final Markit Eurozone Manufacturing PMI eased to a four-month low of 58.6 in February, down from 59.6 in January, better than the earlier flash estimate of 58.5 and well above its long-run average of The PMI has remained above the 50.0 no-change mark, signaling expansion, for 56 months. The eurozone manufacturing sector continued to expand at a robust pace in February. Although rates of increase in output and new orders eased further from the highs reached before the turn of the year, the sector is still enjoying one of its best growth spells over the past 18 years.

8 Energy 8 March 1 The U.S. Energy Information Administration reported that natural gas spot prices fell at most locations this report week (Wednesday, February 21 to Wednesday, February 28). The Henry Hub spot price fell from $2.65 per million British thermal units (MMBtu) last Wednesday to $2.61/MMBtu. At the New York Mercantile Exchange (Nymex), the March 2018 contract expired Monday at $2.639/MMBtu. The April 2018 contract price decreased to $2.667/MMBtu, down 1 Wednesday to Wednesday. March 2 On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $61.25/bbl on Friday, March 2, down $2.30 (-3.6%) from last week's close of $63.55/bbl. Oil prices increased after the U.S. Energy Information Administration reported that crude oil stockpiles rose by 3 million barrels in the week ended Feb. 23, a greater increase than anticipated by most analysts. Active U.S. oil-drilling rigs advanced by 1 for the second straight week, the seventh increase in the last eight weeks. Compared to last year, oil rigs have increased by 191. Brent Crude on London's ICE Futures exchange closed the week down at $64.37/bbl (-4.4%). Friday's spread between the two was $3.12/bbl, down from last week's spread of $3.76/bbl CME Group Inc. Crude Oil Near-Month Futures (WTI & Brent) (U.S. dollars per barrel) Brent WTI

9 U.S. Dollar Federal Reserve Board Weekly Nominal Broad Dollar Index (1997 = 100) Broad Index 30 Day Moving Avg. February 23 According to the most recent release by the Federal Reserve Board, the Nominal Broad Dollar Index closed the week at on Friday, an increase of six-tenths of one percent from the previous week's close of The result walked back some of the decline from a week ago, and was the third weekly increase in the last four weeks. The Index remained above its 30-day moving average for the third consecutive week. Over the last six months, the index is down nine-tenths of one percent, while it's off 6.3 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 Chinese Yuan to US Dollar 1.40 Canadian Dollar to US Dollar Chinese Yuan to One U.S. Dollar 30 Day Moving Avg Canadian Dollars to One U.S. Dollar 30 Day Moving Avg Federal Reserve Board Federal Reserve Board Japanese Yen to US Dollar 1.30 US Dollar to Euro U.S. Dollars to One Euro 30 Day Moving Avg Japanese Yen to One U.S. Dollar 30 Day Moving Avg Federal Reserve Board Federal Reserve Board

10 , 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. 10 '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 Overview Aluminum Statistical Review (Annual Fact Book) Aluminum Highlights (Weekly) Aluminum Situation (Monthly) Summary of Producer Shipments and Inventories (Monthly) Primary Aluminum Primary Aluminum Production U.S. and Canada (Monthly) Primary Installed Capacity (Annual) Shipments of Primary Aluminum by Form (Quarterly) Mill Products Index 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 Use Extrusion 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) Castings U.S. Foundry Castings Shipments (Quarterly) Canada Foundry Castings Shipments (Annual) Recycling New 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), Monthly Foreign 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.