With constrained supply and solid demand, the Aluminium market soared globally

The price of Aluminium in March has showcased an upward trajectory backed by a supply shortage and elevated demand. Aluminium prices surged drastically over the past month, exceeding their height in 2008 during the global economic crisis. This soar in prices is mainly due to Russia and Ukraine dispute; Russia itself is the fifth largest exporter of Aluminium, exporting 6-8% of Aluminium globally. Ukraine is one of the exporters of Alumina and Aluminium ores for Russia. During the conflict between Russia and Ukraine, the whole value supply chain of various commodities has been disrupted, mainly metals and crude oil. 

Australia’s ban on exporting Alumina and bauxite to Russia has caused a significant threat to Aluminium’s production activity. Australia exports nearly 18-20% of Aluminium ore to Russia, and due to the imposed sanctions, production activity is reduced. However, elevated coal prices and power pressures from winter are the other factors affecting production growth. Thus, European nations depend on Aluminium imports as they have reduced metal production. 

Due to the resurgence of COVID, the Chinese authorities took strict measures leading to a lockdown in most affected provinces, which, in turn, disrupted the supply chain of numerous commodities. Along with it, China’s controlled carbon emission policy also impacts pressure on the market. Thus, in China, production activities were pressurized due to the uncertain market dynamics. However, in India, manufacturers claim that the production margin of Aluminium is more than the demand. Market players are hoping to exceed records in terms of profit; India being one of the leading exporters of Aluminium, will confront an opportunity for exporting Aluminium at high prices. Aluminium prices have risen more than 20 % as compared with January 2022.

As per ChemAnalyst, “The price of Aluminium will soar due to increased production activities to fulfil end-user demand and high operational rates from end-use industries. The demand that remained from the European nation will boost India’s exporting activity for Aluminium, making India the lead exporter. Also, sanctions imposed on Russia are not going to be readily removed. Thus, it is expected that Aluminium costs will surge 5-20% in the coming months.