Over last three decades, the global Aluminium industry has been undergoing structural changes. New and major production centers have emerged since 1980s which have slowly but surely taken over the leadership in terms of not only as leading production centers but also fast emerging consumption regions. We are talking here of the China and Gulf factors as well as the emerging growth in the BRIC nations. The economic meltdown of 2008-09 did effect the global Aluminium industry in terms of capacity buildup but fortunately not as badly as it impacted the ferrous and other non-ferrous industries both in the primary and secondary and downstream segments.
The slowdown in Europe seems to be getting too prolonged. Europe has not only been a major aluminium consumption center but also the prominent technology, equipment and engineering service provider to the primary and downstream aluminium industries since the invention of Hall-Herault Process of industrial aluminium production in 1889. A drop in the fortunes of the industry in Europe is obviously having its impact on the flow of new and advanced technologies and the resultant pace of technology up-gradation and management of ‘scale of economies’, worldwide.
The market leader of the industry normally takes up the mantle of technology leadership, too. China, the current leader has been trying to fill up the space to some extent but just about.
The growth in demand and supply in the Americas had long remained the driving force of growth of the global aluminium industry. The economic recovery of the region particularly that in USA has looked like coming out of the trough since over a year now. However, the economic meltdown and slow recovery rate has taken its toll on the otherwise traditionally high cost producers in the region. There have been spate of smelter closures, mergers and de-mergers and the region which had been the ‘mother of R&D and technology creation and innovations’ too seems to have slowed down considerably in this field.
The third major region of aluminium production and consumption in the world, though rarely quoted in the same breath as the west, had been the Soviet Block and the Eastern European region. With the breakup of Comecon and the Soviet Union, the aluminium industry in the region lost its closed chain of captive consumption in the engineering sector in the later part of last millennium. The formation and growth of Rusal seems to have put life back into the Russian aluminium sector but the flow of cutting edge technologies from this region is yet to make an impact on global aluminium industry Eco- system.
There cannot be two opinions to the fact that the Industry constantly needs better technologies to maintain its economic viability. The general business rule of ‘growth and expansion’ not being a ‘luxury’ but a necessity for survival does apply to global aluminium industry, too. There are questions to be asked of the long term impact the spate of recent closures of primary and downstream aluminium industries around the world is going to have in the absence to new technologies in ensuring their economic viability as and when these closed units try to come back on stream. Questions also are coming up if new units that would come up to fill up the demand gap that is bound to come up with the next round of upturn in prices would attain the scales of economy and desired unit production in the absence of the availability of right technologies to the industry at right cost ?
The industry trends of last 5-6 decades has clearly shown that the major production centers are moving away from market centers to resource centers. China proved slight deviation to this with the exploding demand risen out of a ‘break-neck’ overall national economic growth rate being the locomotive of expansion of the Aluminium industry there. But the slowdown both at national and global levels is now making its impact felt there, too.
How the dynamics of the industry is going to change in the coming decades would be interesting to watch and visualize. But one aspect has changed for sure. The seven year cycle of business ‘Crest and Trough’ no longer remains a standard tool of business planning for the global primary and downstream aluminium industry!