During the last decade, GCC has emerged as one of the major primary aluminium producing regions of the world, with production increasing from 1.8 million tonnes in 2008 to 5.3 million tonnes in 2018. The region’s share of world primary production increased from 4.5% to 8.3% during this period. However, around 80% of the total primary aluminium produced in the GCC region is exported and the rest gets used by the domestic downstream sector. Aluminium usage including primary and recycled metal in GCC region is estimated at 1.2 million tonnes for 2018. Aluminium is used in the manufacture of various downstream products including flat rolled products (FRP), foil, extrusions, wirerods and castings. From the end use perspective, currently, the architectural, building and construction (ABC) sector is the main driver of the domestic aluminium downstream products demand. Packaging and cables & conductors are also key use sectors. Transportation, electrical and other industrial applications are the emerging markets for the future.

Aluminium usage by downstream products, 2018 (000 tonnes)

Total usage: 1.2 million tonnes (approx.)

Aluminium FRP usage in GCC region stood at about 410,000 tonnes in 2018. Saudi Arabia, UAE and Bahrain are the major markets in the region and the packaging sector accounted for about 54% of the FRP usage. Ma'aden and Garmco are the two major producers of FRP in the region. Aluminium foil usage in GCC is estimated at around 105,000 tonnes for 2018. Most of the aluminium foil demand is met through imports. Household foil and semi-rigid containers account for about 42% of the foil usage.

Aluminium extrusions usage in GCC region stood at an estimated 400,000 tonnes in 2018 and over 85% of this is used for ABC applications. Saudi Arabia and UAE account for close to 80% of the regional market. Some of the leading producers of aluminium extrusions in the GCC region include Al Jaber Aluminium Extrusions, Al Taiseer Aluminium Factory, Aluminium Products Company, Arabian Extrusion Factory, Bahrain Aluminium Extrusions, DAC Extrusions, Elite Extrusion Company, Gulf Extrusions and White Aluminium Extrusions.

GCC: Aluminium extrusions usage, 2018

Total usage: 400,000 tonnes (approx.)

Aluminium wire rods used in the manufacture of overhead bare conductors accounted for about 18% of the aluminium usage in GCC. In recent years, the demand for aluminium wire rod is driven by Saudi Arabia where the Saudi Electric Company, the main electric power provider is gradually switching from copper to aluminium for new high voltage and medium voltage projects. Castings which now account for a small share of 4% of the total aluminium usage is poised to grow in the coming years.

The GCC region offers potential to expand into fabricated products market that are yet to be explored by the domestic fabricators. Aerosols, pots & pans, components for various industrial applications are few such products that can be manufactured in GCC. Investing in opportunities outside the building & construction sector will be the key to the development of downstream market. With the onset of worldwide trend towards EVs and lighter vehicles, the transportation sector offers a plethora of opportunities for downstream industry in the region. In the long run, development of rail and metro rail networks across the GCC region is also expected to generate demand for downstream products from infrastructure to coach manufacturing. There is potential for the GCC region to emerge as a component fabrication hub in supporting such market developments. While the GCC region is an exporter of primary aluminium and downstream products, the region does import significant quantities of FRP and foil for domestic consumption.

The GCC region not only provides opportunity for the primary aluminium sector but also offers good potential for the development of downstream industries. The market prospects in the GCC region look promising with increased government spending in the coming decade. Events such as Expo 2020 and FIFA world cup in 2022 to be hosted by the GCC countries will also boost the consumption of aluminium downstream products in the region.

Disclaimer:

This article entitled ‘Aluminium downstream opportunities in the GCC’ is intended to provide the reader a flavour of the aluminium downstream markets in the GCC region and has been prepared based on secondary research supported by data & estimates provided by MCG. While every effort has been taken to gather and present reasonably accurate data, information & analysis, the author and Madras Consultancy Group do not accept any direct or indirect legal liability of any kind. Prior to undertaking any business or investment decisions, further detailed investigations / studies are recommended. The author can be contacted at shanker@mcg.in