Global production for aluminum decreased by 1.2% in Q1 2022 as compared to Q4 2021 and 1.9% as compared to Q1 2021. China is the world's largest producer of aluminum; the global production decline was mainly due to a lower output in China. Aluminum production down in China is due to high energy cost, power constraints, and the impact of the spring festival holiday. Aluminum prices increased by more than 16% in Q1 2022 as compared to Q4 2021. The price increase has been driven by the gap generated between supply and demand.
In Q2 2022, the global production for aluminum is expected to increase by 4.1% from Q1 2021. The demand for aluminum is bound to increase because of the increase in demand from various end use industries, such as electrical and industrial production. Aluminum price is forecast to increase by 3.7% in Q2 2022. The increase in aluminum prices will be due to ongoing supply chain disruption and increasing in energy and raw material costs which raised aluminum production costs. The figure below depicts the change in demand and price of aluminum over the past five quarters. Data also provides forecasts for Q2 of 2022 as below.
Source: World Aluminum Institute, Lucintel
Figure: Global Quarterly Aluminum production and Price Trends
In North America, aluminum production declined by 1.2% in Q1 2022, as compared to Q4 2021 due to logistic challenges, high energy cost, and raw materials shortage. Another main reason was the Russian invasion of Ukraine as the U.S. imports higher purity material from Russia for aluminum production, and Russia cut off the supply due to war. Contrary to this, in Q2 2022, the North American aluminum demand is expected to increase due to growth in various end use markets such as electronics and packaging.
In Europe, aluminum production declined by 5.8% in Q1 2022, when compared to Q4 2021; however, it is expected to move in an upward trend in Q2 2022. Production for aluminum decreased in Q1 2022 due to production cuts because of soaring energy costs. The energy shortage problem commenced in Europe due to Russia cutting off the supply of natural gas to Europe because of the war between Russia and Ukraine. Aluminum demand is expected to increase further due to increase demand from electronics and packaging industry.
The Asian aluminum production declined marginally by 0.03% in Q1 2022 as compared to Q4 2021 but it is expected to increase in Q2 2022 when compared to Q1 2022. The production decreased in Q1 2022 due to restrictions on power consumption and high energy cost. Prices also increased considerably for aluminum and associated products in Q1 2022 from Q4 2021and it is expected to increase further due to climbing raw materials costs and unfavorable foreign exchange rates. The Asian aluminum demand is expected to increase in next quarter due to ease in COVID-19 restriction and also recovery in the electronics and packaging industry.
In ROW, aluminum production decreased by 2.2% in Q1 2022 as compared to Q4 2021 but it is expected to increase in Q2 2022. The aluminum demand decreased in ROW due to falling demand from end-users like automotive. Aluminum demand is expected to increase in this region in Q2 2022, due to the recovery in economy, market conditions, and aluminum consumptions.
The price and demand analysis on above is published monthly for various regions. Lucintel analysts collect supply, demand and price data from various suppliers and consumers on a monthly basis and also analyzes news on supply and demand issues, production, and price trends. This allows Lucintel to publish unbiased assessments on price and demand movements to help you make confident business decisions on your negotiation or business issues.
Become a valued Lucintel member to gain access to thousands of market data, price and demand trends, and more for one low rate ($89 / month to $1,850 / month). Analyst and sales support included.