According to Fitch Solutions Macro Research, with the strong demand growth driven by the construction and automotive industries outpacing production growth, there may be many shortages in the global aluminum
market in the next few years. By 2026, the global primary aluminum market will basically be in a state of insufficient supply, because the increase in demand will exceed the increase in output. The company expects that from 2026, the market will turn to oversupply. The outlook for global aluminum demand will benefit from the steady growth of the construction industry in major countries and the increasing role of automobiles as a substitute for light steel. Fitch predicts that from 2019 to 2023, the global aluminum market will be in short supply or almost in equilibrium, and the aluminum inventory-sales ratio will steadily drop from 10.5% to 4.7% during the same period. In the next few years, global aluminum production will continue to grow, because rising prices will encourage producers to continue to increase production. It is estimated that from 2019 to 2028, global aluminum production will increase by an average of 2.7% year-on-year, slightly lower than the average growth rate of 5% in the previous 10 years. In the short term, it is expected that this year's production will increase by 3.4%. This is because the company expects to follow last year’s supply disruption (from the shutdown of Norsk Hydro’s Alunorte refinery in Brazil to the tariff-related supply disruption of Alcoa) , This year's output will recover. As of July, supply disruptions in Canada and Brazil have been resolved, and output growth is expected to accelerate significantly in the second half of this year. It is expected that China's aluminum production growth will slow in the next few years, because government-driven integration and stricter environmental supervision will halt production of higher-cost and lower-efficiency production capacity. However, in the next few years, absolute output will not drop completely, and China's aluminum output is expected to rise, from 34.1 million tons this year to 40.8 million tons in 2028, an average annual growth rate of 2.1%, the average annual growth rate over the past ten years At 11.7%. Despite this, China will still be the driving force in global aluminum production, and will account for more than half of global aluminum production in the next few years. Fitch stated that in terms of demand, the global aluminum market will remain stable in the next few years, driven by the steady growth of demand in Asia and the increasing application of aluminum in the automotive and aerospace industries. However, as China's economic growth slows, metal demand also declines, and global demand growth will gradually slow down. It is estimated that by 2028, aluminum consumption will increase from 62.9 million tons this year to 78.6 million tons in 2028, an average annual growth of 2.8%. In the next few years, India will become a significant growth market for aluminum consumption. It is predicted that by 2028, India's aluminum consumption will increase from 2.6 million tons this year to 10.3 million tons, an average year-on-year increase of 15.8%, surpassing all other major consumer countries. In the more strictly regulated auto markets such as the United States, the European Union, and Japan, aluminum integration will be strengthened, and markets in developing countries will provide further growth opportunities. Fitch said that although this trend is expected to continue in the long-term, the increase in aluminum prices in the short term will create resistance to aluminum integration in the automotive industry, as automakers want to reduce costs. Information source: Fitch Image source: Internet
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