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Global Market (Demand & Supply) – In Focus

2022: Macroeconomic Uncertainty & Turmoil Hit Aluminium Industry (+1% YoY)

• 2022 has been a volatile year: impact of Russia-Ukraine War, ongoing COVID-19 concerns in China, higher energy costs in Europe, rising interest rates, fears of recession and continuous supply-chain disruptions have taken their toll on the Aluminium market. Demand in Middle East rose by 4% Year-over-Year (YoY) fuelled by higher consumption in UAE (+7% YoY), Bahrain (+1% YoY) & KSA (+1% YoY). Consumption in North America was relatively good (+2% YoY) supported by infrastructure spending as well as surge in the auto and packaging sectors. Shy growth in Chinese consumption (+1% YoY) owing to COVID-19 lockdowns and logistic challenges. Lower power availability, higher energy costs and inflation continue to weigh on European demand (-3% YoY)
• Global supply rose by a modest 2% YoY. Production in China grew by 4% YoY following 2021 supply cuts and delayed ramp ups. Middle East supply increased by 3% YoY supported by UAE (+6% YoY) & Bahrain (+2% YoY). European smelting industry was hit hard by escalating gas and power prices -> curtailment in supply (-8% YoY) while North America production compressed due to economic slowdown (-3% YoY)
• World market registered a deficit by 2022-end with China (-420,000 MT) and without China (-480,000 MT)
• LME-cash averaged US$2,707/t in 2022 - up by 9% YoY

2023: Mixed Macroeconomic Outlook: Uncertain and Inflationary Market Sentiments

• Global demand consumption will be shaped by the aftershocks arising from higher inflation and interest rates, supply-chain disruptions coupled with governments’ ability to continue providing stimulus. This uncertain macroeconomic outlook will cloud the Aluminium market
• Power shortages and surging energy costs in Europe and US are likely to increase output cuts while Chinese smelters’ output will rise at a slow pace
• Global supply-chain pressures are set to ease and freight rates will continue to drop
• Regional premia under pressure owing to concerns over metal demand
• Weak market sentiment and a firm US$ to weigh on LME Price. Prices will range between US$2,200/t – US$2,400/t