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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

Aluminium supply chain: Challenges and ways to overcome them

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The exceptional features of aluminium make it an excellent choice for manufacturing various products ranging from household items to aerospace. If we talk about only the transportation sector, the automotive lightweight material market is anticipated to reach US$ 99.3 billion by 2025.

This metal is by far the best option to construct long-distance power lines. Smartphones, tablets, TVs, laptops, etc, use aluminium for their sleekness and performance. A robust supply chain is mandatory to meet the steadily increasing demand for this metal in different industrial spaces. Its procurement at different stages is sometimes riddled with supply chain hurdles that need proper mitigation. Let us take a look at the aluminium supply in a worldwide scenario.

The worldwide aluminium supply map

Aluminium is the most abundant metallic element in the Earth’s crust (8.23 per cent by mass) and the third most plentiful element overall (after oxygen and silicon). Bauxite is the primary source of aluminium, and in 2023, its production has crossed 400 million tonnes (preliminary estimate) worldwide. In 2024, the worldwide bauxite supply is poised for growth, with an anticipated production reaching approximately 409 million tonnes. Astonishingly, 72 per cent of this output comes from Guinea, China, and Australia. Nearly 85 per cent of this crude ore is used for producing aluminium via a complex refining and conversion process.

Three countries mainly contribute to the majority of the metal produced: China, Russia, and India. Out of these, China alone produces 59-60 per cent of the global aluminium . An efficient supply chain will be able to connect all these countries participating in producing aluminium worldwide. Let us focus on the current aluminium supply chain strains.

Aluminium supply chain strains

The primary source of aluminium is bauxite ore. Any disruption in bauxite mining operations or limited access to bauxite reserves can strain the entire supply chain.

Geopolitical crises, conflicts, attacks on cargo ships, economic slowdown, the impact of high energy prices, high bank interest, etc, have raised multiple barriers that interrupt the seamless aluminium supply chain for many countries. Price volatility can create uncertainty for producers, consumers, and investors within the supply chain.

Fluctuations in demand for aluminium products, influenced by economic conditions, consumer preferences, and industrial activities, can strain the supply chain. Sudden shifts in demand or oversupply can lead to inventory imbalances and pricing pressures.

Imposing additional tariffs, sanctions, and anti-dumping duties are also major causes which have impacted the aluminium market dynamics and fragmented the supply chain. But still, the acceptance of aluminium is on the higher side, and the production forecasted is a plus. It may be small in percentage, but negative growth is not anticipated. So, what’s the trend in resolving its supply chain barriers?

B2B online marketplaces: Reducing the complexity of the aluminium supply chain

The future of B2B is online marketplaces . The world went digital a long time ago. Still, the reality is B2B suppliers have been hesitant to board these online marketplaces due to a lack of digital assistance or fear of investment. But the tipping point is that 65-70 per cent of the B2B companies have already entered the online world.

One of the biggest hurdles of the aluminium supply chain is its fragmentation. It leads to complexity, resulting in improper tracing of the movement of semi and finished aluminium products. The latest B2B platforms consolidate the aluminium supply chain fragments into one. A few of these are AL Biz. This platform provides a consolidated marketplace offering competitive pricing, transparency, security, and a wide range of options for all stakeholders in the value chain.

Focus on aluminium recycling

Aluminium recycling reduces the need to extract new aluminium from bauxite ore, which typically involves extensive mining operations. Cutting out this step makes the supply chain shorter and more direct. This means fewer intermediaries and processes involved, leading to reduced complexity.

Recycling aluminium locally or regionally reduces the need for long-distance transportation of raw materials. This can streamline the logistics of the supply chain, cutting down on transportation costs, risks, and complexities associated with managing extensive transportation networks. Recycling aluminium, while requiring just 5 per cent of energy inputs compared to traditional ways of production, is generally less complex than extracting aluminium from ore.

Embracing aluminium recycling fosters a circular economy model where materials are continuously reused and recycled. This closed-loop system can lead to greater transparency and traceability within the supply chain, as materials are tracked from production to recycling and back into production again.

Changing the supply chain strategy

Global disruptions in the aluminium supply chains require modification of the strategies involving the leading manufacturers and buyers. For instance, the conventional just-in-time supply chain format has shifted to just-in-case in the past few years due to the global pandemic. Companies are looking for the best means to grow their inventories on domestic soil, resulting in better supply chain management.

Concreting buyer-supplier relationships

A concrete relationship between buyers and sellers can reinforce trust, resulting in better supply chain management. Considering sellers equal is the first step in a meaningful professional relationship. Prioritising buyers and sellers for stock procurement will enhance productivity at all levels.

Professionals in this field should maintain proper communication to strengthen the bond with single-source suppliers and vice versa. Suppliers can also arrange special programs to increase buyers’ security and guarantee trust for doing continuous business with handpicked buyers. This step will avoid aluminium supply chain disruptions to a considerable extent.

Wrapping up

Aluminium, one of the most crucial pillars of modern technology, will require a well-defined supply chain. Such disruptions will eventually disappear when suitable solutions are implemented across all the phases. Logistics companies like Maersk have initiated transparency in the supply chain by implementing end-to-end digitisation and visibility. We must craft the right solution for specific aluminium supply chain disruptions and overcome the challenges. A consolidated approach with proper access to information will pave the way for a better future.


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