Global shipment for aluminum remained almost flat in Q3 2021 as compared to Q2, while it grew by 3.0% as compared to Q3 2020. Slowdown in end use industries like vehicle production limited the demand for aluminum. There is a growing concern that China's new climate policy, which focuses on greenhouse gas emission reduction, could limit future supply of the metal. Aluminum prices on an average increased about 11% in Q3 2021 as compared to Q2 2021. Aluminum price increase has been driven by the gap generated between supply and demand; the gap is created due to supply chain constraints.
In Q4 2021, the global demand for aluminum is expected to increase by 2.4% from Q3 2021 due to the increase in demand from various end use industries, such as automotive and construction. Aluminum price is forecasted to increase by 4.3% in Q4 2021. The increase in aluminum prices is due to global loose monetary policy pushing up prices of bulk commodities, including aluminum. Also, higher energy prices, such as oil and natural gas, raised aluminum production costs. The figure below depicts the change in demand and price of aluminum over the past five quarters and one forecast quarter.
Source: World Aluminum Institute, Lucintel
Figure 1: Global Quarterly Aluminum Shipment and Price Trends
North America
In North America, aluminum production decreased by 4.2% in Q3 2021, as compared to Q2 2021. Automotive and Construction account for ~35% of the US aluminum consumption; decrease in demand for aluminum was due to decline in end use markets, such as transportation, construction, and industrial. Contrary to this, in Q4 2021 the North American aluminum demand is expected to increase due to growth in various end use markets such as automotive, construction, and industrial production.
Europe
In Europe, aluminum production marginally declined by 0.3% in Q3 2021, when compared to Q2 2021; however it is expected to move in an upward trend in Q4 2021. Demand for aluminum decreased in Q3 2021 due to the decline of various end use industries, like transportation, construction, and industrial production. In Europe, light vehicle sales decreased by 20% in Q3 2021 as compared to Q2 2021. Aluminum demand is expected to increase further due to supply chain disruption getting stable.
APAC
The Asian aluminum production slightly declined by 0.3% in Q3 2021 as compared to Q2 2021 but it is expected to increase in Q4 2021 vs Q3 2021. The demand decreased in Q3 2021 due to decline in various end use industries, like transportation, construction, and industrial production. China is the world’s largest aluminum producer; the production of aluminum in China fell by 0.6% in Q3 2021 as compared to Q2 2021. Prices also increased considerably for aluminum and associated products in Q3 2021 and Q2 2021. The Asian aluminum demand is expected to increase in next quarter with recovery in import and export activities and increased trade activities.
RoW
In RoW, aluminum production increased by 1.9% in Q3 2021 as compared to Q2 2021 and this growth is expected to continue in next quarter of 2021. The demand for aluminum increased as light vehicle sales increased in RoW by 3.6% in Q3 2021 as compared to Q2 2021.
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