Aluminium maintains upward surge as supply crunch persists

Value of oil & gas put at $171bn in 2018

ALUMINIUM PRICES HAVE CONTINUED TO RISE OVER 2021 AND HAVE FOR A LONG WHILE RE CORDED the second-best performance among base metals on the London Metals Exchange (LME) after tin, with prices steadily trading higher as the market continues to tighten, despite China having released stocks from its state reserves.

This is according to a market report by analysts at Dutch multinational banking and financial services corporation,ING Group.

With Chinese primary aluminium production far below expectations by more than 1.2 million tonnes, the report projected that the power issues that affected a large part of the world’s largest aluminium producer during the last quarter of 2021 will continue into early 2022.

Another uncertainty bothering production was also centred around Yunnan, China’s largest primary aluminium production hub as power shortages and the widespread power crunch imposed on production has seen aluminium smelters operate at minimal levels.

For 2022, ING said it only expects very moderate growth in production with restarts and ramp-ups only likely in the latter part of the year, while the inelastic supply of the commodity is an indication that it will take some time to see any significant volume.

As such, the report noted that additional primary supply growth is heavily reliant on the rest of the world. However, access to cheap and clean power supplies was labelled a key factor determining the sustained supply growth from existing projects and new supply in the future.

Moreso, the power crisis in

Europe is expected to lead to primary production falls for the third year in a row; we expect very limited capacity to come online in 2022.

On the other hand, aluminium consumption has recorded significant recovery in 2021, underpinned by large stimulus packages, despite incidents of supply chain constraints.

ING analysts projected more aluminium consumption from green-related areas such as solar energy and the ‘light weighting’ of autos, adding that aluminium will continue to benefit from the global energy transition-related area in the future.

“We expect this aluminium consumption to rebound next year. We also expect strong construction demand to continue to power on from North America and Europe, although strong consumer demand from the US may cool a little as the economy pivots from goods to services, weighing on Chinese exports of aluminium goods,” the report stated.

At the close of the week’s trading activities, LME aluminium rose 0.4 per cent to $2,636 a tonne, maintaining its bullish outlook.

Other base metals showed mixed results as nickel rose 0.2 per cent to $19,920 a tonne, tin gained 0.1 per cent to $39,550 a tonne, copper edged up 0.2 per cent to $9,550 a tonne,lead slipped 1.2 per cent to $2,257.50 a tonne, and zinc dropped 0.3 per cent to $3,299.50 a tonne.