Aluminum Outlook 2021: Surplus Expected, Lower Prices Ahead

Update:25 Mar 2021


In terms of demand, given the strong performance of the Chinese economy in H2, Wood Mackenzie is expecting Chinese primary consumption to grow by 2.1 percent to reach 37.5 million tonnes in 2020.

“China is currently experiencing a revival in post-lockdown economic activity,” Shivkar said. “Key end-use sectors such as construction and infrastructure are driving an uptick in demand. As such, we see 2021 growth at 2.7 percent.”

Outside China, Wood Mackenzie estimates that demand will fall in 2020 by 12 percent followed by 7 percent growth in 2021. Global demand is expected to rise by 4.5 percent.

“A strong restocking phase is underway across the downstream value chain,” Shivkar said. “This should drive further expansion in offtake through H2 2021.”

Tensions between the US and China have been the main topic of discussion in the aluminum market for some time. Commenting on whether Joe Biden’s upcoming presidency could be good news for the space, Shivkar said he is likely to take the rhetoric and antagonism out of US-China trade relations.

“However, we do not expect a complete reset of tariffs and trade restrictions between the two countries.”

Looking over to the supply side of the equation, Wood Mackenzie is forecasting aluminum production in regions outside China to increase by 2.9 percent in 2021. “High-cost smelters in the world ex-China regions that were on the brink of closure are now either increasing or maintaining steady output,” Shivkar added. “Meanwhile, China is adding new capacity at breakneck speed.”

Chinese aluminum output is forecast to grow by 4.5 percent to 38.7 million tonnes in 2021, with overall global output to rise by 3.8 percent, reaching 67.7 million tonnes by 2021, according to Wood Mackenzie.

The firm’s assessment of global aluminum market fundamentals points to a 2.1 million tonne surplus of the metal in 2020, followed by a surplus of 1.8 million tonnes in 2021.More about:Auto parts aluminum die casting