Aluminium market assesses sources of growth in a challenging market environment

On April 24-26, 2024, Inga Simonenko, Market Intelligence and Commercial Sustainability Director of Rusal Marketing GmbH was invited to speak at the 19th SMM Metal Industry Annual Conference in Chongqing, China, and share her insights on the current state of the aluminium market.

In her speech, Simonenko stressed the importance of understanding the transformation of demand drivers of aluminium demand in a challenging market environment. It is noted that in 2023, demand for primary aluminium worldwide, excluding China, decreased by 3.7 per cent to 27.4 million tonnes, the lowest level since 2015-2016. In contrast, China experienced a 4.9 per cent increase in demand in 2023. Whilst the primary aluminium market ex-China has experienced a surplus of 1.6 million tonnes, lack of supply in China resulted in a deficit of 1.3 million tonnes, keeping a global market relatively balanced.

Despite market fluctuations, global demand for primary aluminium is expected to increase gradually due to the global trend towards decarbonisation. The demand from the electrical sector outperforms expectations. A significant factor for this is the required replacement of outdated power transmission infrastructure and the building of new connection lines for the delivery of energy from renewable sources. In particular, the demand for aluminium is growing fastest in the solar sector. In 2023, 3.4Mt of aluminium profiles were used to produce PV modules in China, which may grow to 4Mt in 2024. Today, China's share in all manufacturing stages of solar panels (e.g. polysilicon, primary aluminium and aluminium processing, wafers, cells, and modules) exceeds 80 per cent. China is the home country of the world's top 10 solar PV manufacturing equipment suppliers.

The increasing sales of electric vehicles (EVs) and the need to develop charging infrastructure, which requires aluminium, are also important factors in the growth in demand for primary aluminium. The EV, Solar, and Wind sectors will generate ~7Mt of green aluminium demand by 2030.

While recycled metal gains a share in overall aluminium demand, primary aluminium remains the main metal source over the foreseeable future. Hence, the demand for low-carbon aluminium is expected to grow as part of the green transformation. According to data, global low-carbon aluminium production in 2023 was 14.8 million tonnes (Scope 1&2, <4.0 tn CO2 per ton of Alu), the lowest since 2018 due to drought in China and less hydropower supply availability. This figure emphasises the urgency of the problem and the need for proactive steps towards a green transformation of the industry.

"In such a situation, it is important that companies continue their activities by promoting green technologies and contributing to the sustainable development of the industry. RUSAL is committed to achieving zero emissions by 2050, which confirms that we are serious about environmental sustainability," said Inga Simonenko.

Overall, economic recovery is expected to support aluminium demand growth. In 2024, primary aluminium demand is forecast to grow by 3 per cent globally and up to 3.5 per cent in China.

However, the structure of demand drivers is shifting to the industries and end-use applications, which are vital for supporting an energy transition process. Using aluminium with a low carbon footprint for "green applications" multiplies the effect of combating climate change.

Today, RUSAL stands tall as a global frontrunner in primary aluminium production with a commendably low carbon footprint. Not content with this, RUSAL is actively pursuing further reductions in its carbon footprint. The company is at the forefront of developing strategies to ramp up low-carbon aluminium production and is a key advocate for new technologies that foster the sustainable growth of the industry.

In a significant achievement, 13 RUSAL smelters were ASI-certified in 2021, a testament to the company's unwavering commitment to high production standards. Furthermore, RUSAL has been awarded the prestigious EcoVadis Silver rating and is ESG certified, further solidifying its position as a responsible corporate citizen. The RUSAL ALLOW brand, with its remarkably low average carbon footprint of just 2.3 tonnes of CO₂ at 1&2 scope and 6.1 tonnes of CO₂ at full scope, is a shining example of RUSAL's dedication to sustainable production. This is made possible by the fact that over 99 per cent of the aluminium it produces is derived from clean renewable energy, making its products some of the most environmentally friendly materials on the market. The company is also making strides in green logistics, leveraging new technologies to reduce the carbon footprint of transporting raw materials and finished products.