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Global Aluminum Prices

Market Studies Department

Global aluminum prices traded at $2,170 p/ton (London Metals Exchange, 3-month contract price), on 25/10/2022. This represented an 18-month historic low and a decrease of approximately 48% from $4,103 p/ton since March 2022. The decline is attributed to a global demand decrease for metal and speculation of a potential global economic slowdown. China commands an estimated 60% of the global unwrought aluminum consumption, equating to 41 million tons. However, in Q3 2022, Chinese demand fell in as the country struggled to recover from the ongoing harsh blows of COVID-19. The pandemic restrictions included lockdowns in the largest city, Shanghai.

The mass testing on all 1.3 million residents of Yangpu district required their confinement at home till seeing the results. Although China has recently announced more stimulus measures to combat the scenario, it will still be a few months before they can reflect on aluminum prices. Higher interest rates by the US Federal Reserve and the Bank of England have recently worried aluminum manufacturers. The hhigh cost of credit and energy prices have negatively impacted manufacturers as aluminum smelting and refining processes are energy intensive, with 40-45% of OPEX attributed to power. Meanwhile, manufacturers are turning to other metals since aluminum seems like a loss-making metal. A global energy crisis is still prevalent, with a shift in focus from China to Europe. In August 2022, Slovaco of Slovakia announced the closure of its smelter by September 2022 for the lack of improvement in energy prices.

From January 2022, Trimet of Germany cut aluminum production by 30% at its smelters (135,000 TPA Hamburg smelter and 165,000 TPA Voerde smelter). The significant closures and capacity reductions subdued aluminum prices and demand. There is an inevitable shortage of aluminum in the global market. In Q1 2022, Australia banned alumina and aluminum ore exports to Russia, the third-largest global aluminum producer. However, Reuters assumes that aluminum prices may rebound to an estimated US$ 2,600 p/ton by Q1 2023.

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