Global production for aluminum decreased by 1.0% in Q4 2021 as compared to Q3 2021, and also declined by 0.5% as compared to Q4 2020. High energy cost, production curtailments, and power constraints spread from China to Europe caused to limit the production for aluminum. There is a growing concern that China's new climate policy, which focuses on greenhouse gas emission reduction, this is also the reason for limit production of the metal. Aluminum prices on an average increased about more than 3% in Q4 2021 as compared to Q3 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 Q1 2022, the global demand for aluminum is expected to increase by 1.4% from Q4 2021. The demand for aluminum is bound to increase as electronics and packaging industries will pick steam. Aluminum price is forecasted to increase by 2.2% in Q1 2022. The increase in aluminum prices will be due to increasing demand against expected supply limitations, and 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: Global Quarterly Aluminum production and Price Trends
North America
In North America, aluminum production slightly declined by 0.4% in Q4 2021, as compared to Q3 2021. The North America aluminum production declined due to raw materials shortage. Magnesium and silicon are mainly use in the production of aluminum, and the shortage of these materials bothered supply of the aluminum. Contrary to this, in Q1 2022, the North American aluminum demand is expected to increase due to growth in various end use markets such as electronics, packaging.
Europe
In Europe, aluminum production marginally declined by 0.1% in Q4 2021, when compared to Q3 2021; however, it is expected to move in an upward trend in Q1 2022. Production for aluminum decreased in Q4 2021 due to energy prices have raised sharply. Aluminum demand is expected to increase further due to increase demand from electronics and packaging industry.
APAC
The Asian aluminum production declined by 1.9% in Q4 2021 as compared to Q3 2021 but it is expected to increase in Q1 2022 vs. Q4 2021. The production decreased in Q4 2021 due to high energy cost and China wants to meet its carbon neutrality target. China is the world’s largest aluminum producer; the production of aluminum in China fell by 2.2% in Q4 2021 as compared to Q3 2021. Prices also increased considerably for aluminum and associated products in Q4 2021 and Q3 2021. The Asian aluminum demand is expected to increase in next quarter with recovery in electronics and packaging industry.
RoW
In RoW, aluminum production increased by 1.6% in Q4 2021 as compared to Q3 2021 and this growth is expected to continue in first quarter of 2022. The demand for aluminum increased as light vehicle sales increased in RoW by 20.1% in Q4 2021 as compared to Q3 2021.
