Aluminium has seen high volatility in the global metals market in the past two months. In mid-October, LME prices hit multi-year highs of $3,198 per tonne. Prices then corrected steeply to $2,550 in early November before stabilising and moving up to around $2,700.
Volatility is likely to continue. Most analysts expect demand to drop, due to a drop in global growth rates and China cooling down as well. But there are estimations that supply could tighten as well, due to high energy costs. Aluminium production is very power-intensive, since bauxite ore is put through electrolysis to produce the metal. Hence, smelters are cutting back production.
The Q2 (July-Sep 2021) saw strong aluminium demand outside China with a pickup across consumption sectors like construction, packaging. One key customer – the auto sector – is struggling due to chip shortages. The aviation sector is also in slowdown. But most analysts think prices will not fall
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