Aluminum prices are projected to drop in 2020 and 2021 to around $1,700mt and $1,615mt, respectively, according to the Australian government’s department of Energy, Innovation and Science.
The decline is attributed to rising supply and dwindling demand for the metal. Aluminum prices fell 29pc in 2019 due to a global economic slowdown that dampened demand for aluminum. LME spot prices declined an average of 15pc this year compared to 2018. During the last quarter of 2019, LME spot prices fell to around $1,718mt because of decreased demand, specifically from China, the world’s largest aluminum user. By 2020, the average LME spot price is projected to fall 5.1pc to $1,700mt, and another 5pc in 2021 to 1,615mt.
However, aluminum production is projected to increase 3.8pc through 2021, leading to more price decreases because of oversupply: Consumption is expected to decline at least 1.2pc per annum over the next two years.
During Q3 2019, consumption fell 6.2pc to 16mn mt compared to Q3 2018, due to the Sino-US trade war and slowing economic growth. China consumed 9mn mt of aluminum in September 2019, recording a consumption decline of 6.8pc compared to a year earlier.
Chinese production has fallen 3.6pc to 9mn mt, resulting in a decrease of world alumina usage by 3pc to 29mn mt. However global aluminum production is believes to rise 3.6pc and 4pc in 2020 and 2021, respectively. Looking specifically at the third quarter, global aluminum production is forecasted to decline 2.2pc to 16mn mt in Q3 2020 compared to Q3 2019, because of lower output from China.
Australian Bauxite production rose 8pc to 26mn mt in Q3 2019 compared to the same quarter last year. Alumina production, however, declined 1.4pc to 4.8mn mt during the same period.
The aluminium production in Australia was flat in Q3, while the Australian Bauxite production increased by 8pc at 26mn mt compared to the same period last year. The Alumina production however dropped by 1.4pc to 4.8mn mt in Q3 2019.