Global aluminium supply glut to increase by 20 million mt in 2019

The latest available data suggests the rising supply situation is likely to further inflate the global aluminum stock levels. The stock levels are most likely to exceed 20 million mt in 2019, the research note said. According to the analysts, the rapid pace of growth in the metal supply poses big threat to the market.

Aluminum inventory levels had hit record highs of 13.7 million mt at the end of 2014. The global aluminum supply witnessed a growth of 8.8% as against the demand growth of 6.6% during the year. The demand is expected to outpace supply growth during 2015 to 2020. Despite this, global aluminum inventory levels are expected to increase in the wake of increased exports of semi-finished products from China. Further, lower energy costs may ramp up aluminum production around the world in the coming years, it noted.

The global aluminum stocks are expected to grow at a steady rate of around 6-8% per annum during the 2015-2018 period. The growth is likely to compound to 20.1 million mt in 2019. The inventory levels are expected to rise further to 21.6 million mt in 2020, almost double the metal inventory levels in 2009.

The supply glut will be accelerated by commissioning of new aluminum capacities in China. The country is expected to add around 5 million mt of new capacities in the forthcoming years. Moreover, low energy costs have led to many producers to postpone their decision to implement production cuts at plants. There is need for immediate capacity curtailment in order to curb supply glut situation.