Aluminium Prices Brace for Impact: Global Economic Slowdown Spells Uncertainty in 2023
Analysts predict that due to a slow recovery in the world economy, the prices of aluminum will hover around $2,300 per tonne. The demand for aluminum is expected to stay low because of the sluggish global economic growth, causing the metal’s prices to continue a 6% decline since January.
Australia’s Office of the Chief Economist states that the London Metal Exchange (LME) aluminum spot price is anticipated to drop by 13% in 2023, averaging $2,365 per tonne. The slowing growth worldwide is a key factor in this price decrease.
Research agency BMI attributes the pressure on prices to the slow recovery of China’s commodity-intensive sectors and a weak global demand outlook. ING Think adds that the fundamental situation for aluminium remains unchanged, especially in Europe where major restarts aren’t expected before 2025, and demand remains weak.
BMI revises its aluminum price forecast for 2023 to an average of $2,300 per tonne, down from $2,500. Currently, aluminium contracts on the LME are at $2,178 per tonne.
The metal, widely used in aerospace, packaging, automobiles, and construction, faces weak demand globally, partly due to disappointing Chinese export data. BMI links the decline in factory activity of aluminum-intensive products to weak export demand outside China and predicts downward pressure on prices.
China, the largest consumer of aluminium, contributes significantly to the metal’s price weakness. The construction sector, making up 30% of aluminium demand in China, is also struggling, especially after the bankruptcy filing of China’s property giant Evergrande. Despite the current challenges, analysts expect aluminium prices to rise in the long term due to the shift towards a green economy.