ALUMINIUM 2018 INSIGHTS
Good development in aluminium despite uncertainties
The aluminium business developed well during the first eight months of 2018. In the first half of 2018, aluminium remained the uncontested top performer among all metals traded on the London Metal Exchange (LME). This high de-mand was reflected in the stock levels of LME-accredited warehouses, which had shrunk substantially throughout the world. In early September, stock levels were at 1.089 million tonnes.
During the first half of 2018, the global production of primary aluminium was around 1 per cent below the previous year. Overall, production in China has shown a slight decrease, while the rest of Asia has expanded its production quite a lot, according to the IKB Bank in Düsseldorf. Experts at the bank are ex-pecting to see production reaching around 64 million tonnes in 2018. Overall, the bank observed a steady level of production in Europe and a slight downturn in North America. In the Gulf states production has been increasing again. As before, the worldwide demand for primary and recycled aluminium has been boosted by lightweight design in the automotive industry, the good order situa-tion in the aviation industry, a boom in the continental European construction industry and also in the packaging sector.
The dominant issues in the first half of 2018 were US sanctions against Rusal, the world’s second-biggest aluminium manufacturers, and US tariffs on alumin-ium – issues which are continuing to cause plenty of unrest in global metal markets. Recent political developments are currently leading to more insecurities about the aluminium supply over the next few months. It is still rather difficult to gauge the consequences facing manufacturers and processors, and prices will definitely continue to be volatile due to uncertainties in today’s market. By the end of the third quarter of 2018, IKB is expecting the price of primary aluminium to move to around the $2,200 mark per tonne, within a bandwidth of +$250 per tonne. Should sanctions against Rusal subsequently start to take effect from 23 October, then the $2,500 mark per tonne will probably be exceeded, says IKB.
The European aluminium industry is concerned that sanctions and tariffs will lead to substantial market shifts that might impact the entire supply chain. This might cause supply and delivery bottlenecks in raw aluminium and aluminium oxide, and it might also lead to price increases. Ultimately, the higher prices will filter down to processors and user industries such as automotive, construction and packaging – an effect which is neither in the interest of aluminium manu-facturers nor customers.
The industry believes that the sanctions will have a considerable impact on trade. After all, the EU is a net importer of raw aluminium and alumina. Further-more, the sanctions might cause market shifts for all market players, with conse-quences along the entire supply chain. This would also affect major user indus-tries, such as the automotive sector. Several market players are concerned that supply security and price predictability can no longer be guaranteed, leading to competitive disadvantages compared with non-European suppliers, such as China, India and the Gulf states.
Yet despite all uncertainties, there are highly positive indications that, in all, 2018 will have been a good year for aluminium. The use of this light metal is being driven, in particular, by the automotive sector. The demand for aluminium has been increasing steadily, along with a growing hazard awareness, especial-ly about air pollution. Regardless of whether the race is eventually won by elec-tric vehicles or whether trucks and ships will use liquid gas or even hydrogen as an alternative fuel – in all of these cases, the only way to achieve some kind of cost effectiveness will be to save on weight. The automotive industry is already replacing heavy metals such as steel by lightweight aluminium. This trend should gain further momentum with the implementation of ambitious plans to set up entire fleets of electric vehicles. Aluminium prices are therefore continu-ing their upward trend.
The broad spectrum of the production and processing of this versatile light metal will be showcased at ALUMINIUM 2018 in Düsseldorf. This biggest aluminium trade fair and conference in the world will present industry innovations, mega-trends such as additive manufacturing and e-mobility as well as ways to save energy and other resources.