ALUMINUM MARKET ANALYSIS

The global aluminum market has been facing significant challenges due to fluctuations in the prices of raw materials. Aluminum production is a raw material intensive industry which relies heavily on bauxite for the extraction of alumina and then aluminum. However, prices of bauxite have witnessed high volatility in recent times due to various macroeconomic and geopolitical factors. As bauxite prices are determined in the international markets, fluctuations in currency exchange rates further impact the prices. Similarly, prices of other raw materials, such as caustic soda and electricity, also contribute towards overall production costs. Since raw materials account for nearly 50% of total aluminum production costs, their unpredictable price movements squeeze margins of aluminum producers. This persistent challenge of volatility in input prices makes capacity expansion and long-term plans of aluminum companies very difficult. Unless stable raw material supply and prices are ensured, issues like suboptimal capacity utilization and delays/cancellation of projects will continue hampering the overall growth of aluminum market.

Market Opportunities: Emerging economies boosting infrastructure development

The global aluminum market has a huge growth opportunity arising from increasing infrastructure development activities in various emerging economies. Numerous developing nations are focusing heavily on modernizing their public infrastructure by expanding road, rail, and building construction projects. As aluminum is a preferred material for several construction applications due to its lightweight and corrosion resistance properties, its demand is expected to surge manifold from the construction sector. For instance, countries like India, China, Brazil, and Indonesia have outlined massive infrastructure investment plans over the coming years. Mega projects around transportation, urban development, utilities, and facilities are being rolled out. This growing infrastructure push by emerging markets will present enormous business potential for aluminum product manufacturers and traders to cater to the booming construction demand. Aluminum consumption is forecast to grow at an accelerated pace if such infrastructure development plans are executed effectively in these key developing regions.