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US primary aluminium production remains low

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Global Mining Review,

According to the US Energy Information Administration (EIA), the production of primary aluminium in the US has fallen by more than 50% since January 2015. The US consistently produced about 140 000 metric t of aluminium each month until mid-2015, when output slowed significantly. Since April 2016, primary aluminium production has averaged approximately 60 000 metric tpm, even as aluminium prices have slowly increased.

Primary production of aluminium is more price-sensitive than secondary production of aluminium (i.e., recycling). Although the recent downturn in US primary production of aluminium was initially attributed to declining aluminium prices, the price of aluminium has nearly returned to early 2015 levels, while primary aluminium smelting levels remain relatively low.

Several other factors have contributed to the recent decline in domestic primary aluminium production, including higher labor costs and the strength of the US dollar. Primary aluminium production is extremely energy-intensive and uses electricity throughout the smelting operation.

Plants have curtailed production rather than closing entirely. The downturn in domestic primary aluminium production is unlikely to reverse in the near future.

According to the US Department of Energy’s Advanced Manufacturing Office, aluminium is the most energy-intensive major product produced in the US, requiring about 45 000 Btu/lb of production.

Electricity prices for industrial customers are higher in the US than in other large primary aluminium producers. The primary aluminium production process is also labor intensive. In addition, a strong US dollar makes domestically produced aluminium unattractive to foreign buyers and also makes intermediate inputs from foreign suppliers more attractive.

According to the US Geological Survey, most US aluminium imports come from Canada, Russia, and the United Arab Emirates. US aluminium exports have remained relatively constant since 2015, while imports have increased.

Total US aluminium supply, including primary production, secondary recovery, and imports, has remained at or above early 2015 levels. Secondary production has remained relatively flat, and an increase in imports has made up for the loss of primary production.

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