In this article, Ben Smye, Head of Growth at materials platform Matmatch, outlines some of the challenges and opportunities for aluminium suppliers in the coming years.
{alcircleadd}For many decades, steel was the material of choice in the world’s largest industries. But in recent years, increasing demand for lightweight steel alternatives has put aluminium in the spotlight.
As a result, there are several opportunities for suppliers to make inroads into new markets. At Matmatch, we help connect engineers and product developers looking for materials with suppliers, which give us insight into developments in the whole industry. In this article, I’ll touch on some of the larger trends we have seen in the aluminium market and explain the increasing importance of digital as a conduit to reach new customers in the current climate.
In recent years, the growth in demand for aluminium has largely been driven by a few industries. While these are global trends, they are also applicable to Middle-Eastern markets.
In the automotive sector, increasing regulatory pressure and consumer demand for lighter, low-emissions vehicles has led OEMs and their suppliers to seek new materials that could help them achieve this goal. The aluminium industry has benefitted as a result.
There has also been a rise in demand from traditional consumer applications, such as beverage cans and household appliances. This has largely been driven by increased demand in key markets (particularly China, US and Japan), along with demand from emerging economies where the standard of living has been rising.
Finally, buyers in the aerospace, defence, shipping and construction industries have all been looking for strong, durable, lightweight alternatives to steel in recent years.
Although the global demand for aluminium has grown over the last few years, there are signs that it is slowing. In general, economic growth has slowed in some key markets such as China, which has had a knock-on effect on the aluminium market. The trade war between the US and China is also a contributing factor here.
Despite this, such events also bring opportunities. For example, the US-China trade war opens up the possibility for Middle-Eastern suppliers to step in and fill gaps in demand as companies look elsewhere for lines of supply.
And it also forces both suppliers and their customers to reevaluate their options. If suppliers are too reliant on a small number of high-volume customers, they are exposed to significant risk if just one customer decides to go elsewhere. Likewise, on the buying side many companies recognise the risk of being too reliant on a single supplier and this forces them to diversify their supplier base.
Companies that can move quickly and position themselves in the right way are primed to take advantage of such opportunities. They can react to trends in the market and take business from competitors.
At Matmatch, a key area we still see many suppliers lagging behind is in digital. Increasingly, engineers are going online to find and research materials. Yet many suppliers have little more than a basic website to attract them. Or, they focus only on buyers rather than gaining awareness at an earlier stage with engineers who are selecting materials.
The number of engineers using digital tools will only grow in the coming years. Young engineers entering the workforce now expect to go online to find solutions. Many have told us that they are crying out for more digital tools like Matmatch that help them in their day-to-day jobs.
But the digital world can seem overwhelming. Changes happen quickly and it is difficult to keep up with them, which can lead to inertia. Some suppliers have also told us they’re not interested in ‘going digital’ as they already know all their customers. But this is dangerous; companies that ignore the digital shift will be left behind.
If you’d like to know more about how you can reach your future customers online, we can help. At Matmatch, we work with metals suppliers around the world, including some leading aluminium suppliers including Rusal, Alcoa and Hydro. They list their products with Matmatch, which are then visible to our global user base of engineers. Learn more and get involved today.
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