Aluminium prices are trending down, but the shift towards a green economy is set to give the metal a healthy boost.
Short-term outlook
According to BMI, Fitch Solutions’ industry research body, aluminium prices have been on a downward trend since January, leading to revision in the forecast for 2023 to an annual average of US$2300 per tonne, down from US$2500 per tonne as previously predicted.
Slow recovery from a contraction in China’s commodity-intensive manufacturing sectors and a poor global demand outlook has put pressure on prices in recent months, which is likely to continue for the remainder of 2023.
Chinese Government stimulus would boost commodities demand, despite downside risks to this view building. But it is expected that any stimulus is likely to be modest in light of financial risks facing the Chinese economy and would be insufficient to propel metal prices much further.
However, there is still demand in China’s auto sector with rising vehicle production and outside of China global demand for aluminium is still expected to see growth, though muted compared to previous years, and is forecast to rebound in 2024.
Long-term outlook
In the longer term, it is expected that aluminium prices will remain elevated, as demand is supported by the accelerating shift to a green economy.
As the pressures of inflation ease globally and demand rebounds in China, aluminium prices are expected to average US$2500 per tonne in 2024, above the 2023 average.
BMI is anticipating aluminium to peak at US$2900 per tonne in the second half of the decade.
Prices particularly driven by sustained demand from the construction, autos and renewables sectors.
Renewable energy sources like wind and solar use significantly more aluminium than conventional sources.
The growing boom in electric vehicles will continue to increase, with manufacturers increasing aluminium intensity alongside to extend vehicle ranges for light-weight EVs.
Rio Tinto, Alcoa and Glencore are among the biggest aluminium producers listed on the ASX.