Aluminium’s exceptional properties make it an optimal choice for manufacturing diverse products, spanning from everyday household items to advanced aerospace components. Its remarkable characteristics, including lightweight yet robust structure, excellent conductivity, corrosion resistance, and recyclability, contribute to its widespread utilisation across industries. This versatile material facilitates the creation of durable and efficient consumer goods and plays a crucial role in enabling technological advancements in high-performance sectors like aerospace engineering.
Aluminium stands out as the premier choice for constructing extensive power transmission lines and is favoured for its sleekness and performance in various consumer electronics like smartphones, tablets, TVs, and laptops. However, ensuring a robust supply chain is imperative to keep pace with the escalating demand across diverse industrial sectors. Procurement of this metal at various stages often encounters logistical challenges that require effective mitigation strategies. Let’s delve into the global aluminium supply landscape.
Aluminium’s existence
Aluminium constitutes the largest proportion of metallic elements in the earth’s crust, accounting for 8.23 per cent by mass, and ranks third in overall abundance, following oxygen and silicon. However, it should also be noted that iron is the most abundant metal in the earth’s core. While aluminium is the most plentiful metal within the earth’s crust, it is invariably found in compound states, combined with other elements.
Top bauxite and aluminium producing countries and regions
According to AL Circle’s latest industry-focused report, “Global Aluminium Industry Outlook 2024”, worldwide bauxite mining is predicted to cross 400 million tonnes. Astonishingly, Guinea, Australia, and China are the three main contributors to this figure. According to IAI, around 90 per cent of the global alumina supply is used in aluminium production.
China leads as the primary producer of aluminium, contributing approximately 60% of global production, with India and Russia following closely behind. However, the Gulf Cooperation Council (GCC) region is also among the top producers on the list.
Aluminium supply chain strains
International conflicts have raised multiple barriers interrupting many countries’ seamless aluminium supply chains. The Ukraine-Russia geopolitical crisis has caused a supply chain crisis of various commodities, metals, and crude oil. Australia’s ban on supplying alumina and bauxite to Russia has resulted a significant threat to primary aluminium production activity. In the same aspect, higher import tariffs on Russian aluminium by the US Govt. has also influenced the issue. The bauxite export prohibition implemented by Indonesia in mid-2023, the political instability and the fuel depot explosion in Guinea, increased tariffs imposed by various nations, and the recent Red Sea dilemma are among the key challenges exacerbating disruptions in global supply chains.
Analogue meets digital : A new era of market fusion unveiled
In the aluminium industry, the value chain spans from mining and processing to fabrication, transportation, storage, consumption, and ideally, recycling. Businesses that own multiple verticals within this chain stand to gain significant efficiencies.
Throughout the value chain, businesses often rely on intermediaries or brokers for advice on sales and purchases, depending on their position in the cycle. These intermediaries contribute crucially with their local expertise, industry relationships, and comprehension of the specific metal involved. However, their involvement typically remains in a more traditional, analogue format.
The exponential expansion of the electric vehicle (EV) industry worldwide has led to a corresponding surge in aluminium production, driven by its status as a preferred material for manufacturing EVs.
Utilising digital marketplaces , intermediaries leverage their local knowledge to navigate geographical complexities, logistics challenges, and intricate market nuances like material grades, shipment schedules, and pricing dynamics. Contrary to intuition, traditional analogue methods seamlessly complement these digital platforms, enhancing market access and participant diversity. This symbiotic relationship fosters heightened price competition and market efficiency, ultimately expanding market reach and liquidity.
Empowering seamless transactions: Trusted ‘Digital B2B Marketplaces’ facilitating billions in trade
Digital business-to-business (B2B) marketplaces are relied upon for facilitating transactions totalling billions of dollars annually across diverse industries, encompassing aluminium ore, wrought aluminium, aluminium scrap, aluminium products, and other aluminium value chain essentials. They are instrumental in enhancing market dynamics for physical commodities.
B2B digital markets serve as expansive platforms that broaden distribution networks, fostering increased competition and market liquidity. They facilitate price discovery through diverse auction methodologies, with buyers engaging in incremental bidding to establish final prices. This bidding process may occur in either an open or closed format, allowing for comprehensive tracking of buyer activities, including lot exploration, bidding activity, and ultimate success or loss in securing lots.
Upon implementation, B2B markets can integrate advanced data science techniques, such as machine learning, to enhance efficiency for sales teams. These technologies enable the generation of targeted recommendations concerning products, potential buyers, and optimal timing, empowering sales operations to operate more effectively.
Conclusion
In the aftermath of the pandemic, the commodities sector is poised to maintain the core features that facilitate market operations, yet it will undergo substantial transformation due to heightened digitalisation. With global attention focused on ‘Greening up’ and achieving net-zero emissions goals, digitising the multi-billion-dollar commodity value chain is imperative. This shift will give rise to new markets while enhancing existing ones. While disruption is inevitable, it will be accompanied by opportunities for those who welcome change.