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Aluminum Highlights

Week Ending: January 1, 2021An update on industry activity and economic indicators

While all of the base metals’ prices closed higher in 2020, the complex starts a brand-new year with the following macroeconomic uncertainty bubbling in the background:

• A weak dollar index which begins trading near 2018 lows and a rebound in the currency cannot be ruled out• Fresh calls for stricter lockdowns in Europe while the region struggles with the new Covid-19 variant• Fresh geopolitical tensions between China and the United States after the New York Stock Exchange delisted

three Chinese telecom firms• The sizeable rebalancing in LME speculative funds positioning

Profit-taking did feature in the closing stages of last year, which we attribute to year-end book-squaring. The LME aluminium price was down by 2.5% in the week to December 31. On a month-to-month price performance basis, the light metal was down 3% in December, while on a year-on-year comparison, it secured a modest 10% gain from 2019’s close. But LME aluminium failed to surpass the complex’s average 2020 gain of 16.1% and remained the laggard of the complex.

Year-end profit-taking fits with LME aluminium’s speculative funds positioning; gross longs cut their exposure by a sizeable 33,894 lots in the week to December 24, while shorts covered their exposure by 7,033 lots. As a result, LME aluminium’s net long fund position dropped significantly to 91,809 lots from its 2020 high at 118,761 lots.

Fastmarkets’ premium for the supply of aluminium to main Japanese ports (MJP) in the first quarter of 2021 has settled at $130 per tonne, its highest since the third quarter of 2018. The latest aluminium P1020A (MJP) quarterly premium, cif Japan is on top of the London Metal Exchange cash price and for January-March delivery. The premium is up 47.7% from $88 per tonne in the fourth quarter of 2020. The premium is also 56% higher than the first-quarter benchmark for 2020, which settled at $83 per tonne.

Market ViewBy: Yang Cao, CFA, Senior Analyst – Fastmarkets MB

The views expressed in the “Market View” are those of the author and do not necessarily represent the views of the Aluminum Association

A recently released report by the Aluminum Association and the Can Manufacturers Institute (CMI) shows that aluminum cans are the most sustainable beverage package by virtually every measure.

The new report – “The Aluminum Can Advantage: Sustainability Key Performance Indicators 2020” – finds that aluminum cans have a higher recycling rate and more recycled content than competing package types. They are lightweight, stackable and strong, allowing brands to package and transport more beverages using less material. And aluminum cans are far more valuable than glass or plastic, helping make municipal recycling programs financially viable.

The full report is available at:www.aluminum.org/CanAdvantage.

The Aluminum Association

2Industry Activity

January 1, 2021

December 21 – Shipments of Aluminum Extruded Products (extruded shapes, pipe & tube, and rod & bar) by U.S. and Canadian producers totaled 403.9 million pounds during November 2020, a rise of nine-tenths of one percent over the November 2019 total of 400.2 million pounds. Compared to the previous month, shipments decreased 8.1 percent from the October 2020 total of 439.3 million pounds. Year-to-date shipments through November 2020 totaled 4,279.9 million pounds, off 14.2 percent from the 2019 year-to-date total of 4,987.1 million pounds.

200

250

300

350

400

450

500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Extruded Products Shipments2019 2020*

The Aluminum Association Not Seasonally Adjusted

Millions of Pounds

December 22 – Estimated shipments of Aluminum Forgings and Impacts by U.S. and Canadian producers totaled 22.1 million pounds during November 2020, a decrease of 15.2 percent from the November 2019 total of 26.0 million pounds. Compared to the previous month, shipments were off 9.4 percent from the October 2020 total of 24.3 million pounds. Year-to-date shipments through November 2020 totaled 238.9 million pounds, down 26.4 percent from the year-to-date 2019 total of 324.8 million pounds.

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15

20

25

30

35

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Forgings and Impacts Shipments2019 2020*

The Aluminum Association Not Seasonally Adjusted

Millions of Pounds

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 1-703-358-2984 or email rolsen@aluminum.org. © The Aluminum Association, Inc. All rights reserved.

The Aluminum Association

3Industry Activity Continued…

January 1, 2021

December 29 – Preliminary estimates indicate that aluminum demand in the United States and Canada (shipments by domestic producers plus imports) totaled an estimated 20,181 million pounds through October 2020, a decline of 14.2 percent from the year-to-date 2019 total. Demand for semi-fabricated (mill) products totaled 15,000 million pounds, off 12.6 percent. Apparent consumption (demand less exports) in domestic markets totaled an estimated 18,077 million pounds, decreasing 14.0 percent year-to-date.

December 29 – Aluminum net shipments (including exports) by domestic U.S. and Canadian facilities totaled an estimated 1,876 million pounds during November, an increase of 4.9 percent over the November 2019 total of 1,788 million pounds. Shipments of aluminum mill products rose 2.9 percent over the previous year to 1,269 million pounds, while shipments of aluminum ingot for castings, exports and destructive uses rose an estimated 9.4 percent year-over-year, totaling 607 million pounds. Year-to-date in 2020, preliminary producer shipments totaled an estimated 19,541 million pounds, 11.1 percent below the like-2019 total of 21,969. November inventory levels totaled an estimated 3,094 million pounds, decreasing 3.2 percent from the revised level a month ago, and declining 14.0 percent year-over-year.

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Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.

Estimated Producer Shipments(Millions of Pounds)

2019 2020

The Aluminum Association Not Seasonally Adjusted

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Estimated Aluminum Demand(Millions of Pounds) 2019 2020

The Aluminum Association Not Seasonally Adjusted

The Aluminum Association

4Economic Activity

January 1, 2021

December 22 – U.S. real gross domestic productincreased at an annual rate of 33.4 percent in the third quarter of 2020 according to the “third" estimate released by the Bureau of Economic Analysis. In the second quarter of 2020, real GDP decreased 31.4 percent. With the third estimate, the increase in real GDP reflected increases in PCE, private inventory investment, exports, nonresidential fixed investment, and residential fixed investment that were partly offset by decreases in federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. BEA emphasized that the "third" estimate is based on more complete source data than were available for the "second" estimate issued last month.

2.2 2.9 2.1 2.6 2.4

-5.0

-31.4

33.4

-35.0

-25.0

-15.0

-5.0

5.0

15.0

25.0

35.0

Real GDP: Percent Change from Preceeding Quarter (3Q 2020 - Third Estimate)

U.S. Bureau of Economic Analysis Seasonally Adjusted Annual Rates

December 23 – Statistics Canada reports that real GDP in Canada increased four-tenths of one percent in October, following an eight-tenths of one percent increase in September, the sixth consecutive monthly gain. Overall economic activity was still about 4 percent below February's pre-pandemic level. Total manufacturing output contracted eight-tenths of one percent, following a 1.1 percent increase in September. Durable manufacturing fell 2.5 percent, led by transportation equipment (-3.7%), machinery (-4.1%) and fabricated metal product manufacturing (-3.5%). Non-durable manufacturing rose 1.2 percent as six of nine subsectors were up.

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1,6001,6501,7001,7501,8001,8501,9001,9502,0002,050

Canadian Real Gross Domestic Product (chained to 2012 Canadian dollars)

All industries

Manufacturing (R. axis)

Statistics Canada Seasonally Adjusted Annual Rate

December 23 – Sales of new single-family houses in November 2020 were at a seasonally adjusted annual rate of 841,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.0 percent below the revised October rate of 945,000, but is 20.8 percent above the November 2019 estimate of 696,000. The median sales price of new houses sold in November 2020 was $335,300. The average sales price was $390,100. 400

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1,100

U.S. Residential Sales(000 of Single-Family Homes)

U.S. Houses Sold 6 Mo. Moving Avg.

U.S. Census Bureau Seasonally Adjusted Annual Rate

The Aluminum Association

5Economic Activity Continued…

January 1, 2021

December 28 – According to the RV Industry Association, RV shipments totaled an estimated 42,513 units in November 2020, an increase of 43.4percent over the 29,644 units shipped in November 2019. Towable RVs, led by conventional travel trailers, totaled 38,485 units for the month, an increase of 46.3 percent compared to last November's total of 26,297 units. Motorhomes finished the month with 4,028 units, rising 20.3 percent compared to the November 2019 total of 3,347 units. Year to date, RV shipments have totaled an estimated 390,030 units, an increase of 3.0 percent over the 378,554 units shipped in the first eleven months of 2019.

38.5

4.0

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Wholesale RV Shipments(000 of Units)

Towable Motorhome

RV Industry Association Not Seasonally Adjusted

December 31 – The U.S. Bureau of Labor Statistics reported that in the week ending December 26, the advance figure for seasonally adjusted initial claimswas 787,000, a decrease of 19,000 from the previous week's revised level. The 4-week moving average was 836,750, an increase of 17,750 from the previous week's revised average. The insured unemployment rate was 3.6 percent for the week ending December 19, while there were 5.2 million continuing unemployment claims.

An initial claim is a claim filed by an unemployed individual after a separation from an employer.

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Source: US. Employment and Training Administration/FRED

Unemployment Insurance Initial Claims(Thousands)

Last 52 Weeks

The Aluminum Association

6

January 1, 2021

December 21 – According to data collected by the International Aluminium Institute, the global primary aluminum production rate totaled an estimated 66.7 million tonnes in November 2020, a slight increase m/m (0.2%), and an increase of 4.4 percent over the November 2019 rate. Actual production in November totaled an estimated 5.471 million tonnes. The estimated annual production rate in North America (U.S. and Canada) advanced 1.2 percent m/m, and 5.0 percent y/y. In China, the estimated annual rate of production was unchanged m/m at 38.7 mmt, but was 8.0 percent above the rate a year ago. The rate in the RoW increased five-tenths of one percent m/m, but fell two-tenths of one percent from November 2019.

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8.0%

-0.2%

-10.0%

-5.0%

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10.0%

15.0%

20.0%Y/Y % Change in Global Annual Rate of Primary Aluminum Production

N.A. China ROW

Source: IAI and AA

Global Activity

The Aluminum Association

7Energy

January 1, 2021

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-20

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Crude Oil Near-Month Futures (WTI & Brent)(U.S. dollars per barrel)

Brent

WTI

CME Group Inc.

December 31 – On the NYMEX, the near-month WTI crude oil futures (Cushing, OK WTI Future Contract 1) closed the week at $48.52/bbl on Thursday, December 31, up $0.29 (+0.6%) from last Thursday's close of $48.23/bbl (Exchanges were closed Dec. 25th & 31st. Despite an eighth straight weekly climb, U.S. oil futures suffered a hefty yearly fall of 20.5 percent, only partially recovering from the hit to crude demand from the COVID-19 pandemic. Active U.S. oil-drilling rigs rose by 3 (267) this week, the fourteenth increase in the last fifteen weeks. From the level a year ago, rigs were off 403. Brent Crude on London's ICE Futures exchange increased to $51.80/bbl (+1.0%). Friday's spread between the two was $3.28/bbl, up from last week's spread of $3.06/bbl.

December 31 – Because the federal government was closed December 24–25 and January 1, the U.S. Energy Information Administration (EIA) will not report again until January 7, 2021. On December 17, EIA reported that natural gas spot prices rose from $2.45 per million British thermal units (MMBtu) to $2.67/MMBtu.

At the New York Mercantile Exchange (Nymex), the price of the January 2021 contract increased 24¢, from $2.442/MMBtu to $2.677/MMBtu. The price of the 12-month strip averaging January 2021 through December 2021 futures contracts climbed 20¢/MMBtu to $2.780/MMBtu.

The Aluminum Association

8U.S. Dollar

January 1, 2021

December 23 – According to the most recent release by the Federal Reserve Board, the Trade Weighted U.S. Dollar Index closed at 112.31 on Wednesday, December 23, rising three-tenths of one percent from last Friday's level of 111.93. The increase was the first for the Index in a month. Federal offices were closed December 24th and 25th. Despite the slight growth, the Index remained below it's 30-day moving average since very early November. Over the last six months, the Index has declined 6.8 percent, while it has fallen 2.5 percent over the last 12 months.

The Trade Weighted U.S. 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.

6.546.50

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7.10

7.20Chinese Yuan to US Dollar

Chinese Yuan to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

1.28

1.25

1.30

1.35

1.40

1.45

1.50Canadian Dollar to US Dollar

Canadian Dollars to One U.S. Dollar

30 Day Moving Avg.

Federal Reserve Board

103.52

102.0

104.0

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114.0Japanese Yen to US Dollar

Japanese Yen to One U.S. Dollar30 Day Moving Avg.

Federal Reserve Board

1.22

1.06

1.08

1.10

1.12

1.14

1.16

1.18

1.20

1.22

1.24US Dollar to Euro

U.S. Dollars to One Euro

30 Day Moving Avg.

Federal Reserve Board

112.31

110.00

115.00

120.00

125.00

130.00

Trade Weighted U.S. Dollar Index: Broad, Goods and Services(2006 = 100)

Trade Weighted U.S. Dollar Index

30 Day Moving Avg.

Federal Reserve Board

The Aluminum Association

9The Aluminum Association, 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.

The Aluminum Association'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 OverviewAluminum Statistical Review (Annual Fact Book)Aluminum Highlights (Weekly)Aluminum Situation (Monthly)Summary of Producer Shipments and Inventories (Monthly)

Primary AluminumPrimary Aluminum Production – U.S. and Canada (Monthly)Primary Installed Capacity (Annual)Shipments of Primary Aluminum by Form (Quarterly)

Mill ProductsIndex of Net New Order Receipts for Aluminum Mill Products (Monthly)Can Stock Shipments (Monthly)Extruded Products Shipments and Press Utilization (Monthly)Flat Roll Capacity (Annual)Forging and Impacts Shipments (Monthly)Rod, Bar, and Wire Shipments (Monthly)Sheet and Plate Shipments (Monthly)

End UseExtrusion 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)

CastingsU.S. Foundry Castings Shipments (Quarterly)Canada Foundry Castings Shipments (Annual)

RecyclingNew Can Stock (Class) Scrap Receipts (Monthly)Used Beverage Can Reclamation (Annual)

Foreign Trade (based on government customs data)Summary of North American (U.S. & Canada) Imports and Exports by Commodity (Monthly)U.S. Import Dashboard (Monthly)U.S. Aluminum Import Monitor - Section 232 (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.

January 1, 2021