MOSCOW, January 7. /TASS/. China, India, and a number of Asian countries will support the expansion in aluminum demand in 2024, which will increase as renewable energy, the building sector, the automotive industry, and significant infrastructure projects are implemented. According to experts interviewed by TASS, Russian low-carbon aluminum will be in demand on the global market as environmental regulations tighten.
According to their projections, the price of aluminum in 2024 might vary from $2,100 to $2,600 per ton.
Eastern demand
Boris Krasnozhenov, head of Alfa Bank's securities markets analytics department, highlighted that the situation with aluminum demand in China and other nations varies significantly. Aluminum demand in China increased by 4.7% year-on-year in the first ten months of 2023, while demand in the rest of the world declined by 3.8%. At the same time, China increased aluminum imports by 28% in 10 months to almost 1.2 mln tons. According to Australian bank Macquarie, around 80% of the volume were imported from Russia.
Primary aluminum consumption in China was expected to exceed 42 mln tons by the end of 2023, with global consumption estimated to be over 70 mln tons. The growth in aluminum demand in China was primarily due to increased solar cell manufacture. The rise in aluminum consumption in China's automotive industry is another factor. "It should be noted that aluminum consumption is decreasing in a number of countries. Demand in Europe is likely to shrink by 7-8% in 2023, by 2-3% in the United States, and by 4% in Japan," Krasnozhenov said.
Experts predict that China, India, and a number of Asian countries will continue to see increase in their demand for aluminum. The expansion of projects in China under the Belt and Road Initiative and the Dual Circulation Strategy, in particular, will support demand for the metal. Furthermore, as significant infrastructure projects are completed and the construction sector develops, an increase in demand in the domestic market can be anticipated.
According to the Aluminum Association, the dynamics of demand for aluminum in 2024 will surpass demand for other metals. Aluminum will be more in demand in renewable energy, electric vehicle manufacture, ecologically friendly packaging, and building, they predict.
According to Finam Financial Group analyst Alexey Kalachev, with almost certain growth in aluminum consumption in the global market, the availability of excess capacity in the world for primary aluminum production remains a restricting factor. However, a large share of them is obsolete and have a high carbon footprint. As a result, producers who have access to renewable energy will have a competitive market advantage.
Despite the fact that China produces over 60% of the world's primary aluminum, its manufacturers continue to have a sizable proportion of coal-fired power generation, according to the expert. As a result, Russian low-carbon aluminum may continue to be in high demand on the Chinese market.
Rusal, on the other hand, remains a global provider of some of the "greenest" grades of aluminum, thanks to its availability to hydroelectric power, according to Kalachev.
At the same time, the US imposed a protective 200% levy on Russian aluminum, which applies not only to basic aluminum, but also to any products containing Russian aluminum, regardless of the percentage of its content or the country of origin of these products. According to the expert, in such circumstances, Rusal will have to shift its exports to the east, relying on consumers who do not send their products to the US.
Metal price forecast in 2024
Kalachev noted that repeated attempts to lower aluminum prices below $2,100 per ton throughout 2022-2023 were unsuccessful. "The market appears to feel that it is poised to recover from this level. We can expect the price of aluminum to try to gain a foothold in the range of $2,400 to $2,600 per ton in 2024, with moderate optimism," the analyst observed.
According to Krasnozhenov's estimations, the price of primary aluminum in 2024 will remain between $2,200 and $2,300 per ton, with volatility ranging from $2,100 to $2,400 per ton.