Westford, USA, Nov. 16, 2022 (GLOBE NEWSWIRE) -- Global aluminum demand is growing quickly and has a lot of potential. Today, aluminum is used in many products and can be found in everything from automobiles to airplane parts. The global aluminum market was valued at $141.8 billion in 2021 and is expected to grow at a CAGR of 5.82% through 2021 thanks to increasing demand for aluminum in the automotive, construction, aircraft, and renewable energy industries.
The biggest buyers in the global aluminum market are automobile manufacturers. Automobiles are a big part of the global economy and there is always a need for new models to be released each year. Globally, more than 66.7 million cars are sold. Automobile companies need vehicles that are made with strong metal frames so they can last long on the road. Aluminum is perfect for this purpose because it is strong yet lightweight so it doesn't affect how fast the vehicle can go or how much fuel it uses.
Another major buyer of aluminum is the construction industry. Construction materials are required for most buildings and infrastructure projects around the world. When building new structures, architects often require materials such as steel beams, rebar, concrete, glass, and plastic panels made out of aluminum alloys. These materials are necessary to create safe environments while also conserving energy resources by using less material than traditional construction methods would require.
The aluminum market has been growing at a slow but steady rate over the past few years, likely due to the increasing demand for aluminum products in various industries. However, this growth is not without its challenges.
For starters, the current Aluminum production capacity is about 5% higher than what is needed to satisfy global demand. This over production has led to decreased prices and increased availability of raw materials overall. In addition, new green technology initiatives are targeting aluminum production using renewable resources like solar and wind power which could have a negative impact on future industry growth.
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Falling Prices of Aluminum is Reducing Manufactures’ Profit Margins in Aluminum Market
The falling prices of aluminum have squeezed producers’ profit margins, and this has had a negative impact on the global aluminum market. In the past year, prices for the metal have decreased by approximately 20%. This decrease in prices has not just been felt by aluminum smelters, but also aluminum fabricators and food processors who use the metal in their products. There are several reasons for the fall in prices of aluminum. Firstly, China's economic slowdown due to Covid-19 restriction is reducing demand for the metal domestically. Secondly, increased production from other nations is reducing the amount of aluminum that can be bought on international markets. Thirdly, turmoil in Ukraine has disrupted supplies of alumina and other aluminum compounds to consumers throughout Europe.
As of October 2022, the China is the largest producer of aluminum in the global aluminum market. In fact, the country witnessed around 9% growth in the actual production in the month of October. It produced more than 3.45 million tons of aluminum in just one month. Not only this, the country was able to producer over 33.33 million tons of aluminum in the last 10 months, which is more than 3% higher than the last years’ overall production. As a result, the country exported over 5.8 million tons of aluminum and aluminum products to other countries. However, the country has been struggling to see any positive tick in the domestic consumption due to strict covid lockdown and slowed economic activities in the country. As a result, Chinese producers witnessed a significant loss of over $120 per ton.
Lower demand for aluminum market is having a knock-on effect on production levels as companies struggle to make a profit with such low profits. The reduced demand means that many aluminum smelters have had to slash jobs, while others have decided to close down altogether due to low profitability. Aluminum fabricators are reporting similar problems with falling profits and are struggling to keep up with higher levels of competition from Asian manufacturers reliant on lower labor costs.
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Overcapacity, Cost Saving, and Negative Environmental Effect to Challenge Global Aluminum Market Growth
- Overcapacity: Global Aluminum industry is currently facing overcapacity, with a global production capacity of around 68 million tons per year. This has resulted in a decline in the prices of aluminum while causing some producers to exit the market.
- Cost Saving and Innovations: To remain competitive, Aluminum producers are looking to find cost-saving innovations such as new alloys and processing techniques. In addition, they are also focusing on developing markets such as China and India where demand for aluminum products is high in the aluminum market.
- Environmental Impacts: The Aluminum industry has been impacted by environmental concerns in recent years due to the production of waste products such as slag and fly ash. In order to reduce these impacts, Aluminum producers are exploring ways to recycle materials or find alternative sources of energy for processing plants.
- One of the biggest challenges for the aluminum market is finding a way to conserve energy. The Aluminum Association has said that the use of plastics instead of aluminum can save up to 1.2 million metric tons of CO2 every year. The plastic industry uses around 32 billion pounds (15 million metric tons) of recycled material each year, but only 6% of that ends up going into new products. Recycling traditional aluminum cans saves 3 to 6% of the energy used in producing them and also reduces pollution.
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Top Players in Global Aluminum Market
- UC RUSAL (Russia)
- Aluminum Corporation of China Limited (CHALCO) (China)
- Rio Tinto (UK)
- China Hongqiao (China)
- Alcoa Corporation (US)
- Emirates Global Aluminum (UAE)
- Norsk Hydro ASA (Norway)
- Hindalco Industries Ltd. (India)
- CHINA ZHONGWANG HOLDINGS LIMITED (China)
- Vedanta Aluminum Limited (India)
- Novelis (US)
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