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Aluminium Industry Trend & Analysis, Technology Review, Event Rundown and Much More …

Aluminium Industry Trend & Analysis, Technology Review, Event Rundown and Much More …

AL Circle

Not all sheen is robbed off: Aluminium demand fundamentals stay strong!

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Global aluminium industry is visibly distressed. Aluminium prices on London Metal Exchange are yet to find a solid support – the fluctuating downward dip still continues; premiums have collapsed; supply is still in excess of the demand, and to the utter dismay of the biggest aluminium producers of the world, China is still not slowing down on its primary metal production- at least not to the extent it should at the moment! In a nutshell, the market is in a bad shape and aluminium seems to be having little to give back to its investors.

aluminium prices

Though this kind of volatility is not unexpected, given the nature of the commodity’s fundamentals, the changing international trade dynamics leading to worsening of the scenario, is what bothering the producers the most. Major markets across the world including that in the United States are flooded with Chinese semi-fabricated aluminium products such as aluminium extrusions, profiles and aluminium sheet, which are being shipped at subsidized rates, and these are severely affecting domestic markets.

Heidi Brock, President & CEO, The Aluminum Association, USA, recently said in an interview with AlCircle, “this is not simply free trade at work. In addition to the non-market incentives from the Chinese government, there is also mounting evidence that certain producers in China are unlawfully using the system to further distort the market.”

In India too, the situation is quite alarming. Increase of cheap aluminium imports is posing a major threat to the domestic industry, and Indian Government despite its “Make in India” programme in place is doing little to resolve the issue by imposing proper safeguard duty on the imports.

Prof. K.S.S. Murthy, General Secretary, Aluminium Association of India said in this regard, “It is also required to keep a close watch on cheap imports from China and other countries in order to ensure healthy growth in Indian aluminium industry, both primary and downstream.”

However, amid all these challenges there is this one factor that is keeping the entire industry’s hope afloat- aluminium demand is growing (although at a relatively slower rate than the supply growth), and the end use applications of the metal are burgeoning.

No wonder, aluminium makers are focussing more on their downstream verticals as they feel that is what is going to get the cash flowing for them at the end of the day.

Downstream aluminium is heating up

Alcoa, the lightweight metal major, reacting to the hour’s need, has recently announced their decision to split into two independent entities- the Upstream Company and the innovation and technology driven Value-Add Company.  The latter, likely to include global rolled products, engineered products and solutions, and transportation and construction solutions, will be positioned as a differentiated supplier to the high-growth aerospace industry.

The company is also intended to be at the forefront of capturing demand for aluminium intensive vehicles through Alcoa’s recent commercialization of breakthrough technologies such as the Micromill. Additionally, the Value-Add Company will also be directed to meet the demand of aluminium commercial truck wheels and architectural systems markets in North America.

Following Alcoa’s suit is Norsk Hydro, Europe’s third largest aluminium producer, who is already considering a similar split into upstream and downstream divisions to better cope with the global aluminium price slump. Analysts say it (the proposed split) is “just a matter of time!”

Nevertheless, once well-known primary aluminium makers, whether as a separate SBU down the line or as an integrated business entity, are now strengthening their downstream product line-ups and entering into technology tie-ups with big brands in various end user sectors to do justice to the already piled up aluminium in stocks.

Now, the question is: is there adequate pull” to take the consumption of downstream aluminium or other aluminium products (e.g. aluminium alloys and aluminium extrusions) from the present low to the next higher level? How strong is the aluminium demand?

Aluminium demand: sector-wise market overview

aluminium end use applications

From figure1, it is clear that the transportation sector followed by the construction, electrical engineering, and then packaging are increasingly creating opportunities for enhanced aluminium consumption.  


Aluminium demand in the transportation sector is clearly on the rise. The white metal is largely replacing comparatively heavy-weight steel for building cars and trucks. And why only automobiles, the once indispensable metal for the aerospace industry, aluminium, for being lightweight, is now being used in large scale in bicycles, buses, trains, ships and even spacecraft!

The big task ahead for the auto industry is to reduce GHG emission by way of making vehicles less oil hungry, which in turn can be achieved by making them light-weight. This is becoming mandatory across economies as they are embracing stricter CAFÉ (Corporate Average Fuel Economy) regulations in a bid to make their industries more environmentally sustainable. This race amongst car makers to reach the desired light-weighting targets by way of innovation will boost the use of aluminium sheet and aluminium alloy products in a large way.


In construction, the appetite for aluminium is seen increasing mainly in the non-residential construction sector. This comes in the wake of developing countries announcing their plans to overhaul their infrastructure. This is fuelling overall aluminium demand, especially the growth of consumption of aluminium extrusions and aluminium alloy products which offer the same level of strength and durability as that of steel, yet better suited for complex designing and fabrication.

In residential sector too, iron window grills and beams are a thing of past now. Aluminium panels have long replaced them. Aluminium products like curtain walling and structural glazing systems, aluminium roofing and cladding are also becoming commonplace these days.


The monopoly of copper in the electrical sector has practically come to an end, thanks to the increased use of aluminium in a large number of applications. The white metal is used extensively in high-voltage transmission lines, substation busbars, television antennae, and satellite dishes. Exploration of further use of aluminium in electricals will boost aluminium demand for semis, especially aluminium wire rods and aluminium extrusions, which have been fluctuating until now due to absence of adequate takers.


Aluminium packaging is evolving really fast. By virtue of its chemical inertness, infinite recyclability, light-weight, formability, and printability, aluminium is becoming the packaging material of choice for leading FMCG companies who are always looking for out-of-the-box ideas to brand their products differently and stand out in the competition. This increased rate of adoption of aluminium as a solution for green packaging is boosting the consumption of aluminium extrusion products.

Packaging also makes use of a large volume recycled aluminium recovered from aluminium scrap. Aluminium beverage cans and aerosol cans, for example, are recycled extensively with minimal loss of energy. Packaging waste recovery data for the third quarter of 2015 shows that aluminium packaging recycling has recorded its highest ever quarterly performance at 23,330 tonnes.

Aluminium demand and its use in other sectors too is increasing. Mobile handset industry is consuming a lot of aluminium. Right from Samsung, Sony, Lenovo, and HTC to iPhone and Xiaome, every leading brand, nowadays, is bringing out their own exclusive aluminium versions of handset.

All these end-use applications and much more will spruce up aluminium demand for downstream products, providing traction to the entire aluminium industry value chain.

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1 comment

  1. sara

    The global end use of aluminum sectors does not add up to 100%: 25.32+27.35+5.6+8.1+13.17=79.54%
    What is the rest??!!

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