The aluminum market has recorded a contraction over the past year (below the record levels of August 2022), indicating that long-term forecasts for an upward trend in global aluminum production were incorrect. The main reason for this is the slowdown of the global economy, as well as the decline in Chinese production (60 percent of global output) due to plant closures caused by the pandemic, the crisis in the construction sector, and power reductions in Yunnan province, according to HUP’s chief economist Hrvoje Stojić.
As noted in the Weekly Focus, the Australian Bureau of Industry, Science and Resources expects Chinese production to grow by 2025, but at a slower pace to 43 million tons. An additional indicator of supply tension is that price premiums remain high at $50 per ton.
– Globally, the construction sector is still only the second most important segment of demand after transportation, as it accounts for a quarter of demand. Unfavorable economic trends in major economies have finally been offset by the growth in demand from the automotive industry and energy transformation driven by the accelerated expansion of solar panels. The price of aluminum is expected to fall from $2600 to $2400 per ton by the end of the year, while by the end of 2024, a price increase to around $2800 per ton is anticipated – says Stojić.
