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Aluminium Prices Fell Sharply in September Quarter 2019

Metal News - Published on Wed, 09 Oct 2019

Image Source: moneycontrol.com
Australian Government’s Resources and Energy Quarterly September 2019 said that London Metal Exchange spot price for aluminium fell by 15% year on year in the September quarter 2019. averaging USD 1,766 a tonne. Escalating trade tensions between the US and China continued to dampen aluminium demand from China. The fiscal stimulus measures the Chinese government has implemented since October 2018 to offset the impacts of trade tensions with the US have not provided a boost to aluminium demand and global aluminium prices. The price fall was largely contained by the continued inventory drawdown and decreased aluminium production. The LME spot price is expected to remain under pressure for the rest of 2019, and is forecast to fall by 15% in 2019, from an average USD 2,111 a tonne in 2018 to an average USD 1,793 a tonne in 2019.

Global aluminium consumption fell by 4.6% YoY over the first half of 2019, to nearly 31 million tonnes. Both escalating trade tensions between the US and China, and slowing global economic growth, softened the demand for aluminium. China consumed 17 million tonnes of aluminium in thefirst half of 2019, a fall of 5.3% YoY. Over this period, sales in the Chinese automotive sector (one of the country’s largest aluminium consumers) fell by 12% YoY to 12 million units.

World primary aluminium demand is forecast to fall at an average annual rate of 1.6% in 2020 and 2021, to 62 million tonnes by 2021. The decline is expected to be driven by slowing demand from the global automotive industry. Despite the Chinese government’s infrastructure projects designed to offset the impacts of trade tensions with the US, and ambitious initiatives for promoting electric vehicle production to improve air quality, economic uncertainties are expected to discourage consumers from purchasing vehicles in China. In the US, higher vehicle prices (driven by higher import tariffs) and weaker consumer confidence are expected to negatively impact consumer demand for vehicles.

The outlook for aluminium prices in 2020 and 2021 has been revised down by 8.8 and 20%, respectively, from the June 2019 Resources and Energy Quarterly. An unexpected escalation of trade tensions between the US and China is the main driver of this revision.

The outlook for global aluminium consumption in 2020 and 2021 has been revised down by 8.2 and 13%, to 64 and 62 million tonnes, respectively, from the June 2019 Resources and Energy Quarterly. A faster than expected deterioration in trade relations and industrial production has contributed to this revision.

WorldUnit20182019'2020f2021’2019'2020'2021'
Primary aluminium
Productionkt64.40865.1736732769.6531.23.33.5
Consumptionkt66.02864.47563.53362.417-2.4-1.5-1.8
Prices aluminiumc
- nominalUS$/t2.1111.79317001.615-15.1-5.2-5
- realdUS$/t2.158179316621545-16.9-7.3-7
Prices alumina spot
- nominalUS$/t472356342330-24.5-4-3.5
- realdUS$/t482356334316-26.1-6.2-5.5
 

Source :

Posted By : Rabi Wangkhem on Wed, 09 Oct 2019
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