Key highlights from the global aluminium industry, June 2024
In June 2024, the global aluminium industry saw slight price positivity on both the LME and SHFE platforms at the beginning of the month. However, these gains were short-lived, and prices soon declined again. This reminds us again that AL Circle's industry-focused report, "Global Aluminium Industry Outlook 2024", revealed the Metals and Minerals Price Index of the World Bank witnessed a marginal decrease of 0.13 per cent in the fourth quarter of 2023, marking a continuation of the consistent declines observed since early 2022. This downturn is attributed to a deceleration in economic activity in significant global economies, leading to a subdued demand environment alongside ongoing recoveries in the supply of certain base metals. Projections indicate a 5 per cent decline in metal prices for 2024, following a nearly 10 per cent decrease in 2023 on a year-on-year basis. It is anticipated that prices will stabilize in 2025 on a year-on-year basis.
Primary aluminium production in China and many other regions has shown improvement while demand has slowly increased. Several companies have published their Q1 and H1 2024 performance reports, with some revealing extraordinary results and others performing better than the previous year. Some new projects have been listed in the downstream sector. Aluminium demand in the transportation sector is meeting expectations, and the renewable energy sector is also performing well. Although the Western world's economic deceleration remains a concern, the energy prices market situation is under control.
The latest World Economic Forum Net-Zero Industry Tracker highlights the significant impact of the aluminium, steel, cement, and concrete sectors on global greenhouse gas emissions, collectively contributing to around 15 per cent of industrial emissions. These industries, vital for the green transition, face a daunting task in aligning with the 1.5°C climate goals, primarily as global population growth, urbanisation, and economic expansion drive increased demand. Balancing this growth with the imperative to reduce carbon intensity presents a considerable challenge for these sectors.
As per the World Economic Forum report, members of the First Movers Coalition (FMC), a global coalition of companies creating the largest private sector demand for green industrial products, exemplify this approach. The FMC comprises 99 members with over 120 purchasing commitments across seven sectors. By 2030, these commitments are projected to generate an annual demand of $16 billion for emerging climate technologies and achieve annual emissions reductions of 31 million tonnes (Mt) of CO2 equivalent.
Ghana is a significant contender in the global bauxite production arena, boasting an impressive reserve estimated at 900 million tonnes. Yet, this wealth of natural resources still needs to be tapped mainly, missing out on significant economic opportunities. With strategic planning and investment, Ghana has the potential to transform its bauxite industry, catalysing industrial growth, creating jobs, and boosting the national economy.
According to the Ghana Chamber of Mines, Ghana has maintained its status as Africa's leading gold producer and the 11th largest producer worldwide, producing four million ounces in 2023. Gold production is anticipated to range between 4.3 million and 4.5 million ounces, driven by increased output from both large and small-scale producers. Large-scale gold mining firms are expected to contribute 3.4 million ounces. New projects, including Newmont's Ahafo North and Cardinal Resource's Namdini Gold Mine, will play a significant role in this growth.
To know more: https://www.alcircle.com/news/ghana-s-mining-industry-eyes-significant-growth-bauxite-production-to-soar-111113
Guinea will house its second major alumina refinery, which will be constructed by a subsidiary of Emirates Global Aluminium (EGA). The news came after two senior officials of Guinea's mines ministry told Reuters that a non-binding agreement was signed between Guinea and EGA's subsidiary company. The agreement, known as a Term Sheet, states that EGA's subsidiary Guinea Alumina Corporation (GAC) will build the 2 million tonnes capacity refinery in west Guinea by September 2026, initially producing 1.2 million tonnes annually.
The signing was presided over by Djiba Diakité, Minister and Chief of Staff at the Office of the Presidency of the Republic, and Chairman of the Strategic Monitoring Committee for the Simandou project, at the Petit Palais of the Presidency in Conakry, and attended by Government officials including Bouna Sylla, Minister of Mines and Geology, and the members of the Strategic Committee.
To know more: https://www.alcircle.com/news/guinea-seals-an-alumina-refinery-deal-with-egas-subsidiary-111109
According to a report on June 18, some global aluminium producers sought a premium of $185-190 per tonne from Japanese buyers for July-September primary aluminium shipments. The news came after three people directly involved in quarterly pricing talks said. Compared to the second quarter’s premium of $145-148 per tonne, the Q3 premium being offered is 25 to 31 per cent higher.
The latest Q3 premium is even higher than the premium quoted last month by a global producer. According to a report on May 29, Japanese buyers were offered a premium of $175 per tonne, up 18 to 20 per cent from the Q2 premium. During the previous offer, Japanese buyers had already expressed that the premium was too high considering the sluggish domestic demand for aluminium, especially from the industrial and construction sectors. Japan is Asia's most prominent importer of primary aluminium; thus, the premium it agrees to pay each quarter over the London Metal Exchange price becomes a benchmark for the region.
To know more: https://www.alcircle.com/news/the-latest-premium-bid-for-japans-q3-aluminium-shipments-is-even-higher-than-q2-111197
The London Metal Exchange (LME) has experienced a dramatic surge in the wait time for aluminium deliveries, which has surged from zero to over five months following a significant influx of metal from Trafigura Group in May.
Recent exchange data reveals that as of the end of May, the waiting period for aluminium at Istim Metals' warehouses in Port Klang, Malaysia, has extended to 159 days. This is a stark contrast to April when there was no queue. This development underscores the impact of substantial deliveries on the logistical dynamics within the LME. The recent queue at the Istim warehouses in Port Klang, Malaysia, marks the longest wait in the LME system since June 2021, when a 168-day delay occurred. This queue followed a substantial delivery last month, triggering a flurry of metal requests. According to reports from Bloomberg, Trafigura orchestrated the delivery. At the same time, various financial entities, including Squarepoint Capital LLP, Citigroup Inc., and JPMorgan Chase & Co., procured the aluminium and swiftly issued orders for its release.
To know more: https://www.alcircle.com/news/aluminium-delivery-delays-on-lme-surge-post-trafigura-s-record-may-shipment-111129
The German aluminium industry is navigating turbulent waters as it grapples with significant production declines across nearly all subsectors in the first quarter of 2024. This downturn exacerbates the pressure from increasing imports, posing additional challenges for domestic manufacturers, as Aluminium Deutschland released in a press release.
The production of recycled aluminium saw a significant decline despite its critical role in Europe's decarbonisation efforts and the associated market potential. Germany produced 685,000 tonnes of secondary aluminium from January to March, marking a 7 per cent decrease. In the first three months of this year, producers of semi-finished aluminium products experienced a significant decline in volume, with some cases falling by double digits. The total production was just over 571,000 tonnes, marking a 6 per cent decrease. Among these, manufacturers of rolled products saw a relatively moderate decline of 5 per cent, producing around 448,000 tonnes. On the other hand, the production of extruded products experienced a much sharper drop, falling by 13 per cent to just under 124,000 tonnes.
To know more: https://www.alcircle.com/news/struggles-persist-for-the-german-aluminium-sector-q1-2024-sees-a-significant-output-dip-111077
Kaiser Aluminum Corporation, an American aluminium producer, has reportedly confirmed the permanent closing of its Sherman facility this summer. The news followed a statement from Kaiser Aluminum representative Anne McGuinness that stated the decision was due to business challenges at the Sherman location.
About two years ago, Kaiser Aluminum faced a mishap at Sherman plant for a furnace explosion causing a fire outbreak. Following the accident, Kaiser Aluminium had to prepare for a production cut.
To know more: https://www.alcircle.com/news/kaiser-aluminum-confirms-closure-of-its-sherman-facility-by-this-summer-111134
KPS Capital Partners, LP announced an agreement for its portfolio firm, Eviosys, to be acquired by Sonoco Products Company, a leading global entity in sustainable packaging headquartered in Hartsville, South Carolina. The acquisition is valued at €3.615 billion (approximately $3.9 billion), with Sonoco having the option to pay up to $200 million of the total in its stock, contingent on specific conditions. The transaction will conclude by the end of 2024, pending necessary works council consultations, regulatory approvals, and customary closing conditions.
Eviosys stands at the forefront of metal packaging worldwide, specialising in food cans, ends, aerosol cans, aluminium cans, metal closures, and promotional packaging. Serving numerous consumer brands, Eviosys boasts the EMEA region's largest footprint in metal food can manufacturing. With operations spanning 44 manufacturing facilities across 17 countries in Europe, the Middle East, and Africa, Eviosys employs over 6,300 professionals. The company is renowned for its commitment to sustainability, offering a product lineup exclusively comprised of infinitely recyclable metal packaging. Eviosys leads the industry with outstanding performance across various sustainability metrics.
The aluminium industry is intensifying its efforts to reduce carbon emissions, and recycling metal can revolutionise the market. According to the Managing Director of industry consulting firm Harbor Aluminum, the world is set to add 22 million tonnes of aluminium capacity from scrap over the next five years.
Notably, China will spearhead this expansion, with projects expected to contribute approximately 15 million tonnes of new secondary capacity within the same timeframe. This surge underscores a significant shift towards sustainable practices in the aluminium sector, highlighting the critical role of recycled materials in meeting future demands while mitigating environmental impact.
The year-end statistics of 2023, as reported by the United States Census Bureau and the US Geological Survey, revealed a significant strategic shift in the non-ferrous scrap export market, particularly aluminium, with a notable increase in buyers from China.
Through 2023, the United States exported 33.6 per cent of its aluminium scrap production. Domestic furnaces melted 4.06 million tonnes of scrap, of which 2.06 million tonnes were sent by sea container or crossed the border to Canada or Mexico. Of the 2.06 million tonnes of scrap exported, China (including Hong Kong) received 212,000 tonnes, which accounted for 10 per cent of the exports. This figure equates to about 3.5 per cent of aluminium scrap collected in the US last year.
Conclusion
As the global aluminium industry navigates through the complexities of supply chain dynamics and sustainability challenges, June 2024 has marked a pivotal period of adaptation and innovation. From technological advancements in recycling to strategic investments in renewable energy sources, stakeholders across the sector are actively shaping a resilient future. With a steadfast commitment to efficiency and environmental stewardship, the industry stands poised to meet evolving demands and drive sustainable growth in the days ahead.
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