1. Global Aluminium Industry
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2. MARKET OUTLOOK
Global Primary Aluminium Production vs. Consumption Trend
(Million Tonnes), 2012-2018
45.2
46.6
43.4
2012E
48
44.9
2013e
46.6
2014f
Production
49.5
48.3
51 50.3
52.6 52.5
2015f
2016f
2017f
54.3 54.5
2018f
Consumption
Source: International Aluminium Institute (IAI), RNCOS
Note: E = IAI Estimation, e/f = RNCOS Estimation/Forecast
Aluminium is one of the most versatile and essential
materials for the global economy. The commodity’s
extensive properties, including strength, conductivity, recyclability, and lightweight make it the world’s
second most used metal after steel. Aluminium finds
major use in transportation and construction sectors.
China dominates the global aluminium market in
both production and consumption. Boom in the residential and infrastructure markets drive its aluminium
market.
Recent years have seen a continuation of volatility in
aluminium market prices, with prices increasing from
US$ 1843 per Tonne in August 2012, to a high of
US$ 2087 per Tonne in December 2012. A few na-
tions have seen government intervention to absorb
losses by aluminium producers, or providing tax
breaks or cheaper energy. This government intervention is resulting in a large quantity of over-supply of
aluminium suppressing prices further.
Worldwide, rising aluminum stocks have hampered
production and cut down prices. Manufacturers
have slowed down production to reduce pressure on
prices. Industry estimates reveal that while primary
aluminium production is growing at a CAGR of
around 3%, the primary aluminium consumption is
estimated growing at around 4% during 2012-2018.
Global Aluminium Industry

3. MARKET SIZE AND GROWTH RATE
World primary aluminium markets have witnessed
five consecutive years of surplus since 2008. However, production which was in excess of consumption in 2008 contracted in 2012. The fall was due
to low aluminium prices, driven by weak demand
and high stocks. Consumption, on the other hand,
increased at a comparatively faster pace by 6.8%
in 2012.
Amongst key industry verticals, transportation
accounts for 25% consumption share, followed
by construction (24%), packaging (17%), power
(12%) and machinery (10%).
Regionally, APAC dominates both production and
consumption of Aluminium. China alone accounts
for around 40% of global aluminum production
and 45% of consumption. In the last ten years,
China has quadrupled its consumption of aluminum. Already accounting for 42% of global
aluminium consumption, China is forecast to
boost this share to 52% by 2025. Chinese growth
Share of Major Aluminium Producers, (%), 2012
in aluminium consumption is largely driven by
urbanization, goals and strategies of the Chinese
Government has resulted in investments in infrastructure and housing which also consume large
amounts of aluminum. Besides, the continued
strong position of China as a producer of industrial and consumer goods for export result in large
investments in the aluminum industry.
Share of Major Aluminium Consumers, (%), 2012
22.2%
38.1%
40.0%
3.9%
45.0%
4.5%
10.4%
6.4%
6.6%
8.9%
14.0%
China
Canada
China
EU
Russia
EU
US
Japan
India
Others
Others
Source: RNCOS
Global Aluminium Industry

4. Opportunities & Challenges
Opportunities
MIDDLE EAST EMERGING AS MAJOR MARKET
Looking over the supply-side, the market is shifting towards the Middle East due to the availability
of cheap energy in the region. Aluminium growth in Middle East further benefits from advantages
such as rich bauxite reserves as well as economical energy. Also, the close proximity of the GCC
region to European countries enables smelter operators to further reduce costs.
ENHANCED APPLICATION AREAS
The new markets for aluminum are found within aviation, solar cells, electronics, cars and new
types of material for construction. Aluminum has already succeeded in entering part of the copper
market since copper is higher priced and is heavier than aluminum. Therefore manufacturers can
save costs and weight in their production if they are able to exchange copper materials for aluminum materials.
SUSTAINABLE PRODUCTION TECHNOLOGIES
Researchers at the DOE’s Argonne National Laboratory and Noranda Falconbridge are developing a
way to produce aluminum at significantly reduced temperatures. The ITP, working with Aleris Inc.,
among others, has supported the development of a radically new concept for melting aluminum—
isothermal melting—that can dramatically improve energy efficiency in melting and other molten
metal processes. Alcoa has launched a carbon capture technology at its Kwinana alumina refinery in
Western Australia.
Global Aluminium Industry

5. Challenges
PRICE VOLATILITY
In the past few years, aluminium prices have become very volatile, especially due to global economic uncertainties. During 2012, aluminium prices slipped to an average of US$ 2,053 per Tonne,
down almost 15% compared to 2011. Renewed setbacks to global recovery and surplus situation
led prices to fall below US$ 2,000 a Tonne during June-August 2012.
HIGH INVENTORY
The global aluminium market is set to remain in surplus over the next couple of years as demand
growth failed to keep pace with rising supply. Global inventories have remained at 7 Million Tonnes
since the beginning of the year equating to 60 days of consumption and more than double the
levels seen before the financial crisis in 2008.
HIGH ENERGY AND CARBON COST
Another challenge is the demand to save energy and reduce energy consumption in all aspects of
the primary aluminium production process. Also, challenge is to reduce the emissions of greenhouse gases from the aluminium production process. Both the electric power generation from fossil
fuels and the smelting process are major sources of greenhouse gas emissions. Although significant
progress has been made in recent years, this problem is not yet solved, and it will be one of the biggest technological challenges for the aluminium industry in the years to come.
COMPETITION FROM SUBSTITUTES
Carbon fibre-reinforced plastic (CFRP), Titanium, Steel and Composite materials give stiff competition to aluminum. The rivalry between substitutes would become harsher in the following decades
as consumers continuously assessed not only the functional characteristics of competing materials
but also their relative prices.
Global Aluminium Industry

6. Way Forward
Demand for aluminum will continue to rise, particularly in the emerging markets, due to lower per capita consumption of the metal in these parts of world. Additionally, the demand of aluminum is increasing
owing to high aluminum use in the construction and power transmission industries. Growing demand
for “green” building is another driver. Furthermore, aluminum’s role in a wide range of building and
construction applications is poised to grow, due to aluminum’s recyclability, light weight, reflectivity, and
durability.
Usage of aluminum in automobiles will again amplify and continue its growth track as public demand
for a greener environment and increased fuel efficacy compel policymakers to amplify fuel economy
standards, reduce carbon dioxide emissions, and increase the usage of aluminum in automobiles. Besides, aluminum content in the aerospace industry, like aircrafts and missiles is expected to grow, reflecting its positive outlook.
Major players are concentrating on innovative technologies for production of aluminum so that the
consumption of energy can be minimized. The future of the global aluminium industry will be influenced
by its ability to minimize environmental impacts and to be considered as a solution to some of the problems generated by CO2 emissions.
Further, legislation on CO2 emissions may impact both sides of the market simultaneously. Supply
growth may to some extent be hindered by higher production costs related to emissions and higher raw
material and power prices. However, CO2 caps may also favour the use of aluminium by encouraging
energy efficiency and light-weighting, with potential beneficiaries in the transportation, power distribution & transmission, air conditioning & refrigeration, renewable energies, green buildings and other
end-use sectors.
Global Aluminium Industry

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Global Aluminium Industry

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