Market View. Aluminum Highlights. Week Ending: May 4, 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: Jesús Villegas, Vice President, Aluminum Analysis HARBOR Aluminum The views expressed in the Market View are those of the author and do not necessarily represent the views of the Aluminum Association News emerged late last week that China Certification and Inspection Group s (CCIC) North American Branch will suspend operations for a month. The CCIC is the group in charge of giving the certificates needed for anyone aiming to export scrap units to China (not only aluminum, but all types of scrap). Without the proper CCIC certificate, scrap material can t go through Chinese ports. CCIC North America operations (includes the US and Mexico) will be suspended from today (May 4) through June 4. Therefore, with CCIC operations halted, almost all aluminum scrap exports to China from the US or Mexico are effectively blocked for the next month, at least. This new resolution is in the same line (blocking US scrap exports) as China s 25% tariff on aluminum scrap imports from the US that went into effect in early April. In 2017, the US generated 5.2 million mton of aluminum scrap (new + old) and from this exported 15% or kmton to China. China is the biggest buyer of US aluminum scrap given that the freight rate from the US West Coast to China is cheaper than from the US West Coast to the US Midwest region (where most of the US casting production is located). All US aluminum scrap units that are exported to China are low-grade secondary items like zorba, old cast and old sheet. The effective blockage of US aluminum scrap exports to China is expected to result in: a) Increased secondary scrap availability in the US, b) market impacts for secondary scrap and secondary alloy ingot prices, c)larger scrap volumes being exported from the US to Mexico, and d) increased Latam and European scrap units being exported to China. 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 2,500 2,000 1,500 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Estimated Aluminum Demand (Millions of Pounds) April 30 Preliminary estimates indicate that aluminum demand in the United States and Canada (shipments by domestic producers plus imports) totaled an estimated 4,685 million pounds through February 2018, up 6.1 percent over a year ago. Demand for semi-fabricated (mill) products totaled 3,310 million pounds, up 6.6 percent. Apparent consumption (demand less exports) in domestic markets totaled an estimated 4,131 million pounds, up 4.5 percent year-over-year. April 30 Aluminum net shipments (including exports) by domestic U.S. and Canadian facilities totaled an estimated 2,185 million pounds during March, up 2.8 percent over the March 2017 total of 2,125 million pounds. Shipments of aluminum mill products increased 2.1 percent over the previous year to 1,472 million pounds, while shipments of aluminum ingot for castings, exports and destructive uses advanced 4.3 percent year-over-year, totaling 713 million pounds. Through the first three months of the year, preliminary producer shipments totaled an estimated 6,237 million pounds, an increase of 2.8 percent over the 2017 year-to-date total. March inventory levels totaled an estimated 3,048 million pounds, off 4.4 percent from the previous month but up 5.7 percent year-over-year. 2,500 2,000 1,500 1, Estimated Producer Shipments (Millions of Pounds) Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec U.S. Secondary Recovery and Exports of Aluminum Scrap (Millions of Pounds) Rec. '17 Rec. '18 Exports '17 Exports '18 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec U.S. Geological Survey, U.S. Census Bureau April 30 The U.S. aluminum industry purchased an estimated 703 million pounds of aluminum scrap during February 2018, according to aluminum recycling statistics published by the U.S. Geological Survey, Department of Interior, down 3.1 percent from the February 2017 total. USGS estimates that recovery of aluminum and aluminum alloys totaled 640 million pounds, a decrease of 3.0 percent yearover-year. Through the first two months of 2018, preliminary data indicate that recovery of aluminum from scrap totaled an estimated 1,289 million pounds, off 2.2 percent over year-to-date U.S. exports of scrap, not included in the government s consumption statistics, totaled 527 million pounds year-to-date, up 9.2 percent over like-2017.

3 Industry Activity Continued 3 Forgings and Impacts Shipments Millions of Pounds * Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec May 2 Estimated shipments of Aluminum Forgings and Impacts by U.S. and Canadian producers totaled 33.9 million pounds during March 2018, a rise of 5.5 percent over the March 2017 total of 32.1 million pounds. Compared to the previous month, shipments increased 10.1 percent over the February 2018 total of 30.8 million pounds. Year to date shipments through March 2018 totaled 94.4 million pounds, up 3.9 percent over the 2017 year to date total of 90.8 million pounds. May 4 Aluminum imports of ingot, scrap and mill products into the U.S. and Canada (excluding crossborder trade) totaled 1,021 million pounds in March 2018, up 13.7 percent over the March 2017 total of 899 million pounds. Including scrap, which accounted for roughly 52.3 percent of reported aluminum exports in March, exports totaled 604 million pounds, up 10.9 percent over a year ago. Excluding scrap, exports totaled 288 million pounds, up 20.8 percent over last year. Exports of scrap increased 3.2 percent year-over-year. Through the first quarter of 2018, imports were up 6.5 percent to 2,681 million pounds, while exports were up 13.2 percent to 1,685 million pounds. 1,100 1, U.S. Bureau of the Census and Statistics Canada Foreign Trade - U.S. and Canada (Millions of Pounds) Exports Imports

4 Economic Activity Statistics Canada Canada Industrial Product Price Index 2010=100 Industrial Product Price Index Alumina and aluminum production/processing April 30 Statistics Canada report that Canada s Industrial Product Price Index (IPPI) advanced eighttenths of one percent in March (116.7), following an increase of three-tenths of one percent in February (r). The increase was largely a result of higher prices for energy and petroleum products and pulp and paper products. The IPPI excluding energy and petroleum products advanced seven-tenths of one percent. Alumina and aluminum production prices also increased eight-tenths of one percent over February, and were up 6.4 percent over a year ago. The overall IPPI rose 2.3 percent during the 12- month period ending in March, after posting a similar increase in February. May 1 Statistics Canada reports that real GDP in Canada, increased four-tenths of one percent in February, 15 of 20 industrial sectors increased. The growth was led by a rebound in the mining and oil and gas extraction sector. This followed a slight decline in January. The output of goods-producing industries advanced 1.2% in February. The output of services-producing industries edged up one-tenth of one percent. Total manufacturing output rose 1.0 percent month-over-month. Durable-goods manufacturing was up for the third time in four months on broad-based growth as 8 of 10 subsectors grew. 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) Statistics Canada Seasonally Adjusted Annual Rate U.S. Census Bureau U.S. Value of Construction Put in Place ($USD in billions) Nonresidential Residential Seasonally Adjusted Annual Rate May 1 The U.S. Census Bureau of the Department of Commerce reported that the annual rate of construction spending during March 2018 totaled an estimated $1,284.7 billion, seasonally adjusted, a decrease of 1.7 percent month-over-month, but up 3.6 percent over the March 2017 estimate of $1,239.6 billion. Residential construction ($543.8 billion seasonally adjusted annual rate) fell 3.5 percent month-over-month, but was up 5.3 percent year-over-year. Nonresidential construction was at a seasonally adjusted annual rate of $740.9 billion in March, off three-tenths of one percent from February 2018 (+2.5% y/y). Construction spending through the first quarter of 2018 totaled $279.0 billion, 5.5 percent above the $264.5 billion ytd 2017.

5 A-14 J-14 O-14 J-15 A-15 J-15 O-15 J-16 A-16 J-16 O-16 J-17 A-17 J-17 O-17 J-18 A-18 Economic Activity Continued U.S. Census Bureau Durable Goods New Orders Millions of Dollars Inventories (Right Axis) Shipments New Orders Seasonally Adjusted May 3 New orders for manufactured durable goods in March, up four of the last five months, increased $6.5 billion or 2.6 percent to $255.2 billion. This followed a 3.6 percent February increase. Transportation equipment, also up four of the last five months, led the increase, $6.4 billion or 7.6 percent to $91.4 billion. Excluding transportation equipment, March new orders for manufactured durable goods were up one-tenth of one percent m/m. The value of manufacturer's shipments and inventories increased four-tenths of one percent and one-tenth of one percent m/m in March, respectively. May 3 The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that total March exports of $208.5 billion and imports of $257.5 billion resulted in a trade deficit of $49.0 billion, down 15.2 percent from the revised February deficit of $57.7 billion. Exports during March advanced $4.2 billion or 2.0 percent over the revised February total, while imports decreased $4.6 billion (-1.8%) from the February total. The import of capital goods, off $1.5 billion from the previous month, were largely responsible for the decrease in imports. Year-to-date, the goods and services deficit increased $25.5 billion, or 18.5 percent, over March Exports increased $39.2 billion or 6.8 percent. Imports increased $64.7 billion or 9.1 percent U.S. Census Bureau U.S. Trade in Goods and Services ($ Billions) March 2018 Trade Deficit $49.0 Billion Imports Balance Exports Seasonally Adjusted U.S. Bureau of Labor Statistics Month-to-Month Change in Manufacturing Employment (Thousands) M/M Change 12mo. Moving Avg. Seasonaly Adjusted May 4 Total nonfarm payroll employment increased by 164,000 in April, the U.S. Bureau of Labor Statistics reported.. The unemployment rate edged down from the March rate to 3.9 percent with job gains occurring in professional and business services, manufacturing, health care, and mining. Manufacturing employment increased by 24,000 jobs, the sector's ninth consecutive month of growth. That brings the average monthly change for the sector to 20,400 additional jobs over the last 12 months. In total, manufacturing employment has increased by roughly 245,000 jobs over the last year.

6 Global Trends 6 May 1 The Markit final U.S. Manufacturing Purchasing Managers Index (PMI) registered 56.5 in April, up from 55.6 in March and indicated the strongest manufacturing growth in over three-and-ahalf years. April survey data signaled a steep improvement in operating conditions across the U.S. manufacturing sector, supported by stronger expansions in output and new orders. Moreover, new business rose at the sharpest pace in over three-and-a-half years. Meanwhile, rates of input price and output charge inflation accelerated to the fastest since mid Greater global demand for raw materials and recently introduced tariffs were reportedly key factors behind greater cost burdens in April. May 1 The Markit Canada Manufacturing Purchasing Managers Index (PMI) posted 55.5 in April, little-changed from 55.7 in March and well above the neutral 50.0 threshold. April data indicated a positive month overall for the Canadian manufacturing sector, helped by the fastest rise in incoming new work since the start of the year. Export demand picked up markedly, with the latest rise in new orders from abroad the strongest since March However, there were signs that sales volumes had outstripped production capacity in April, which resulted in a further accumulation of backlogs of work. Supply chain disruptions also held back output growth, with the latest deterioration in supplier performance the most marked since the survey began in October May 2 The headline Markit Mexico Manufacturing PMI fell from 52.4 in March to 51.6 in April. Despite the decline, the Mexican manufacturing economy expanded further in April as ongoing improvements in demand encouraged firms to lift production and employment. New work continued to be secured from both domestic and international sources, while firms also stepped up input purchasing amid greater output requirements. There were, however, signs of a slowdown as softer rates of growth were noted for production and order books. Nonetheless, business confidence improved to a five-month high. Job creation picked up in April, with the rise in employment the most pronounced since Aug

7 Global Trends Continued... 7 May 2 The Caixin China General Manufacturing PMI registered 51.1 in April, up fractionally from 51.0 in March. April survey data pointed to a further marginal improvement in operating conditions across China s manufacturing sector. Although output rose at a slightly quicker rate, new order growth slowed amid a renewed fall in new export work. Consequently, purchasing activity rose only modestly, while firms noted higher inventories of both inputs and finished items. Staffing levels continued to decline, which in turn contributed to a further increase in unfinished workloads. Softer demand conditions weighed on optimism towards the year ahead, with the degree of positive sentiment edging down to a four-month low in April. May 1 The headline Nikkei Japan Manufacturing PMI posted 53.8 in April, up from 53.1 in March. Japan s manufacturing sector expanded at a quickened pace during April amid improved growth rates in output and new orders. With robust demand exerting pressure on the production line, firms enhanced operating capacities by raising employment. Nonetheless, greater staff levels did not prevent backlogs of work from increasing. On the price front, inflation rates for both input costs and output charges softened. Lastly, businesses remained strongly positive towards output prospects in April. In fact, the degree of confidence strengthened for the first time since the start of the year amid forecasts of a sustained upturn in demand. May 2 The final Markit Eurozone Manufacturing PMI fell to a 13-month low of 56.2 in April, down from 56.6 in March and slightly above the earlier flash estimate of Although still signaling a solid rate of expansion, the upturn has lost noticeable momentum since the PMI hit a record high in December The weaker growth signaled by the headline PMI was mainly due to slower (yet still robust) increases in new orders and employment. In contrast, output rose at a slightly faster pace than in March. Intakes of new work expanded to the least marked extent since November 2016, in part reflecting a slowdown in the pace of increase in new export Orders.

8 Energy 8 May 3 The U.S. Energy Information Administration reported that natural gas spot prices fell at most locations this report week (Wednesday, April 25 to Wednesday, May 2). The Henry Hub spot price fell from $2.79 per million British thermal units (MMBtu) last Wednesday to $2.73/MMBtu. At the New York Mercantile Exchange (Nymex), the May 2018 contract expired Thursday at $2.821/MMBtu. The June 2018 contract price decreased to $2.754/MMBtu, down 5 Wednesday to Wednesday. May 4 On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $69.72/bbl on Friday, May 4, up $1.62 (+2.4%) from last week's close of $68.10/bbl. Oil prices settled at their highest level since late 2014, with worries over the possibility of tighter global crude supplies fed by concerns over Venezuelan production and a looming decision on Iran sanctions. Active U.S. oil-drilling rigs increased by 9 for the week, advancing for the seventh time in the last eight weeks. Compared to last year, oil rigs have increased by 131. Brent Crude on London's ICE Futures exchange closed the week up at $74.87/bbl (+0.3%). Friday's spread between the two was $5.15/bbl, down from last week's spread of $6.54/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. April 27 According to the most recent release by the Federal Reserve Board, the Nominal Broad Dollar Index closed the week at on Friday, April 27th, an increase of nine-tenths of one percent over the previous week's close of With the result, the Index advanced for the third time in the last four weeks and broke free from of the 117/118 range it's been found itself in over the last eleven weeks. The Index also remained above its 30-day moving average for the second week running. Over the last six months, the index has declined ninetenths of one percent, while it's off 3.9 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 Chinese Yuan to One U.S. Dollar 30 Day Moving Avg Canadian Dollar to US Dollar 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.