Global Market Outlook on Aluminum

  • Asia will continue to dominate the market in terms of growth prospects until 2020 
  • Supply glut and curtailment measures by suppliers will impact production; however, demand will be driven by transportation, electrical engineering and machinery and equipment industries

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Global Market Overview - Production & Consumption

  • Global aluminum production declined by almost 3 percent on a year-on-year basis and stood at 4.957 MMT/month when compared to the per month output of 2016
  • Supply was down by 2.23 percent in the last three months alone; production declined after witnessing a rise from the past three years, due to planned supply cuts from one of the major producers of aluminum, China
  • China produces almost more than half of the world’s total production, it currently holds 54.4 percent share in total production. China planned cutbacks on its aluminum and alumina production from the second half of 2017
  • With the current supply fall, aluminum will end 2017 in deficit of 99,626 MT and will remain in continuous deficit from next one to two years with the expected overall supply loss

Global Market Overview - Regional Breakup

  • Global aluminum capacity is set to decline in 2018, and China gears up for the new air pollution prevention and control action plan
  • The global demand for aluminum in 2018 is expected to increase in proportion to the growth in global gross domestic product
  • Aluminum consumption by the domestic automobile industry is expected to increase, as automobile manufacturers increase the per vehicle aluminum content, including the substitution of aluminum sheet for steel in certain truck models, in response to increasing fuel efficiency standards
  • Aluminum consumption by the US and European aircraft manufacturers is expected to increase, as airlines continue to replace older aircraft with newer, more fuel efficient models
  • China is going to reduce its aluminum producing capacity from H2 2017 to H1 2018. Approx.12 million tons of capacity would be affected and production would fall by between 1 million tons and 1.5 million tons or 3–4 percent of China's annual total production

Global Market Overview - End-use

  • The rapidly growing transport industry has the maximum demand for aluminum in developed countries, driven by expansion in the auto market
  • Developed countries, such as the US, Japan, and the EU member countries, use more aluminum in light vehicle production, which makes cars more energy efficient, in line with the environmental targets
  • Developing countries, such as China, India, etc., are expanding their infrastructure to satisfy the needs of a growing population, migrating to large cities. Therefore, the construction sector has emerged as the biggest consumer of aluminum across the developing economies

Price Trend and Forecast

  • Aluminum prices trading at LME have remained under selling pressure and fell by 6.3 percent in July 2018 and averaged to settle at $2099/MT.
  • Aluminum prices continue to remain under selling pressure following escalating trade tensions between the United States and China as US President Donald Trump’s administration pledged to raise the proposed tariffs on $200 billion worth of Chinese goods to 25 percent from an initial 10 percent has reignited fears of an escalating trade war between the world’s two largest economies
  • Moreover China reported a strong rate of production in the first five months of 2018 as total Aluminum production rose 13.6 million tonnes, up 1.4 percent from year ago levels, National Bureau of Statistics (NBS) data showed. Data from the International Aluminium Institute (IAI) reported that, global output, excluding China averaged 75,800 tonnes in May, which is still higher than the 74,100-tonne average last year