Rusal on Friday presented an upbeat outlook for the year, predicting global demand for aluminum will grow in excess of 1% and top 66 million mt, driven by metal’s growing application in the auto industry.

Should the market live up to this forecast, it would be a positive shift away from last year’s stagnation. In 2019, global aluminum demand inched up 0.1% to touch 65.3 million mt. Rusal’s market share was 6.5%.

In its market overview, Rusal said January saw the global manufacturing PMI climb to 50.4, the highest point since April 2019. The company said it takes this as a sign of a global economic rebound but sounded a note of caution over how the COVID-19 virus might affect the recovery and undermine fundamentals in the first half of the year.

The coronavirus outbreak is expected to dent demand and exacerbate China’s supply surplus, while logistical issues are already disrupting bauxite arrivals and shipping of alumina from refineries in certain areas. Weak demand and excessive inventories could affect aluminum prices and delay new smelting capacity ramp-ups.

Although these risks persist, Rusal said it believes the auto industry could well uphold global aluminium demand this year through new models, including electric vehicles, with higher aluminum content. This and the possibility of speedy mitigation of the aftermath of COVID-19 could push up global demand by 1.3% to 66.1 million mt this year, it said. Consumption of the metal outside of China could increase by 1.1% year on year to 28.8 million mt, while in China, it could rise 1.5% to 37.3 million mt, Rusal said.

With average aluminum content per vehicle at 179 kg, total aluminum content — represented mostly by castings — for the whole car market, including EVs, amounted to 2.99 million mt last year, according to an estimate by research and consulting company DuckerFrontier, which predicted aluminum content would continue to increase, reaching 4.16 million mt in 2028.

China absorbed just over 56% of all aluminum available last year. The country consumed 36.8 million mt, up 2.4% year on year, enough to offset a 2.6% decline in demand in the rest of the world, which stood at 28.5 million mt.

Despite stronger demand, China’s primary aluminum output fell 1.8% last year to 35.7 million mt due to environmental concerns as well as slim profit margins at most smelters.

Aluminum production in the rest of the world, on the other hand, expanded by 1.7% to 28.2 million mt, but was still short of demand with an estimated deficit of 0.3 million mt. Despite a decline in raw material prices, at least half of alumina producers in the rest of the world are operating at a loss and around 10% of aluminum smelters there — with a combined aluminum output of 3 million mt — are also loss-making, Rusal said.

Last year, the company’s own aluminum output was flat year on year at 3.76 million mt. However, its aluminum sales grew 13.8% to 4.18 million mt due to the sell-down of inventories accumulated by year-end 2018. Sales of value added products — comprising alloyed ingots, slabs, billets, wire rod, wheels, high and special purity aluminium — fell 7% year on year to 1.55 million mt. Primary aluminum — the only non-value added product — made up the balance, comprising 63% of the total volume sold.

The company’s average realized price of aluminum in 2019 fell 15% to $1,920/mt, partly as a result of lower share of value added products in the sales mix.