The competitive landscape offers an analysis of the key developments adopted by companies in the market. Players in this market adopted various strategies to expand their footprint and augment their market shares such as agreements, collaborations, mergers & acquisitions, joint ventures, and expansions.
The global aluminum market consists of tier-1 and tier-2 manufacturers. Alcoa Corporation, Rio Tinto Alcan Inc., Rusal, Norsk Hydro ASA, Aluminum Bahrain (Alba), and Vedanta Limited are the major aluminum producers; there are also small-scale producers based mainly in Europe and China. The major players are not concentrated in any particular region but are spread across North America, Europe, Asia-Pacific, and the Middle East. The aforementioned companies are planning to expand their annual production capacities in order to match the current and expected rise in the demand.
The Chinese market accounts for the largest market share due to the capacity expansion of aluminum manufacturers such as Aluminum Corporation of China and China Hongqiao Group Limited.
Moreover, the market is growing at a significant rate on account of the increasing rivalry in order to tap the rising opportunity in applications of transportation, building & construction, foil & packaging, electrical, machinery & equipment, consumer goods, solar, utensils, and hardware & accessories. The players in the market aim to expand the plant capacity and develop innovative products to meet the industry demand.
Hindalco Industries Limited announced the acquisition of the US-based Aleris at an enterprise value of USD 2.5 billion. This acquisition is in line with the company’s strategy to increase sales in the lucrative aerospace and automobile segments.
July 2018
Expansion
Utkal Alumina International, a subsidiary of Hindalco Industries Limited, announced its plan to expand production capacities by 500 kilo tons in the next 30 months.
June 2018
Joint Venture
NALCO formed a joint venture with Almex for the production of auto-grade aluminum and special alloys for the automotive and aerospace industries. The project is envisaged to have an annual production of 50,000 tonnes.
May 2018
Collaboration
Alcoa Corporation collaborated with Rio Tinto for the world’s first carbon-free process for aluminum smelting. Alcoa, Rio Tinto, Apple Inc., and the Government of Canada agreed to provide a combined investment of USD 144.34 million.
April 2018
Expansion
Emirates Global Aluminum PJSC plans to start alumina refining at its Al Taweelah plant in the UAE in 2019. This refinery is expected to have a production capacity of 2 million metric tons per annum.
March 2018
Expansion
Vedanta Limited plans to expand its aluminum smelter unit capacity to 1.8 million tonnes per annum with an added investment of USD 18.08 million. The facility currently has a capacity of 1.6 million tonnes per annum.
February 2018
Investment
Rio Tinto Alcan Inc. invested USD 250 million in the extension of operations at its Vaudreuil alumina refinery in Canada.
January 2018
Expansion
Rio Tinto Alcan Inc. announced the expansion and technological innovation at its Amrun bauxite project in Australia. The project is expected to produce 22.8 million tonnes of bauxite from mid-2019.
December 2017
Expansion
Norsk Hydro ASA invested in the upgradation of its production line and started a second production line in Norway. With both lines in operation, production of primary aluminum will double. By restarting the line, which was shut down in 2009, the company will introduce new technology elements that will give better results. With this development, the plant will produce approximately 190,000 tonnes of aluminum annually.
December 2017
Acquisition
Norsk Hydro ASA acquired two extrusion plants from Arconic in Brazil for USD 10 million. The agreement will strengthen Hydro’s downstream position in Brazil and create a solid platform for further growth.
November 2017
Product Launch
Norsk Hydro ASA announced the launch of two new low-carbon aluminum products designed to help customers reach their sustainability goals and meet the demand from climate-conscious consumers. The products are Hydro 4.0, a hydropower-based aluminum with a maximum content of 4.0 kg CO2 per kg aluminum, and Hydro 75R, aluminum with a guaranteed post-consumer recycled content of minimum 75%.
November 2017
Collaboration
Rio Tinto Alcan Inc. and Minmetals Inc. collaborated for mineral extraction. This collaboration is in line with the company’s strategy to maximize its mining capacity and seek technological help.
October 2017
Investment
Vedanta Resources Plc, the parent company of Vedanta Limited, invested USD 9 billion in India to expand its hydrocarbons and metals and mining business over the next few years to cater to the growing Indian market. The company invested USD 1.5–2 billion in the aluminum sector as well.
October 2017
Expansion
Hindalco Industries Limited expanded the capacity of its downstream mill in Hirakud, Odisha (India), from 135,000 tonnes to 375,000 tonnes per annum.
July 2017
Expansion
Aluminium Bahrain (Alba) plans to expand its aluminum smelter production capacity by 50% to 1.5 million tonnes per annum by 2019. The company has installed six furnaces and other equipment as part of the expansion project.
April 2017
Acquisition
Rusal acquired a portion of LMZ SKAD LLC, a producer of aluminum alloy car wheels in Krasnoyarsk, Russia. Under the terms of the acquisition, Rusal will own a stake in the authorized capital of the company.
March 2017
Expansion
Rusal started operations at its Properzi rolling mill at the Kandalaksha aluminum smelter in Russia with an investment of around USD 19.8 million. The new equipment will produce up to 50 thousand tonnes of value-added products per annum. The launch of the rolling mill is a step in the company’s strategy to increase the output of value-added products.
March 2017
Acquisition
Aluminum Corporation of China has acquired 40% equity interest in Chalco Shanghai.
December 2016
Expansion
China Hongqiao Group Limited purchased two aluminum processing firms, bolstering its expansion beyond primary metal production. The company invested over USD 1.6 billion in the equipment.
July 2016
Expansion
NALCO set up a second aluminum smelter and power complex in Odisha, India, with an investment of USD 204.10 million.
June 2016
Collaboration
Vedanta Limited and the Odisha government commissioned an aluminum park in Jharsuguda, Odisha. The 204-acre state-of-the-art park has helped the company tap the bauxite resources in the state. The park will also aid the company in the easy transportation of aluminum in liquid form at a considerably lower cost.
April 2016
Expansion
Rio Tinto Alcan Inc. modernized its Kitimat aluminum smelter in Canada, ramping up production to 420,000 tonnes. The modernization of the plant will help in the reduction of emissions by up to 50%.
Threat of New Entrants
The global aluminum market is projected to have a moderate threat of new entrants due to the presence of a significant number of tier-1 market players. The key dominant players in the aluminum market, such as China Hongqiao Group Limited (China), Rusal (Russia), Rio Tinto Australia (Australia), and Alcoa Corporation (US), have vertically integrated businesses. The production of aluminum is capital-intensive and is subjected to government regulations. This can restrain new players from entering the market. However, the increasing demand for aluminum will offer lucrative opportunities to existing tier-1 companies during the forecast period
Threat of Rivalry
The market is estimated to have a moderate threat of rivalry as it is fragmented with the presence of tier-1 and tier-2 manufacturers. Each player operating in the market has an extended portfolio for aluminum to provide quality products to meet the customer requirements. The capital-intensive nature of the market and high production capacities of the key manufacturers makes it difficult for new players to enter the market. Moreover, a recent spate of consolidations has reduced the competitive pressure in the market. In addition, companies are investing heavily in R&D and innovation to expand their product portfolios and enhance their positions in regional markets.
Threat of Substitutes
The threat of substitutes in the global aluminum market is anticipated to be high. Aluminum is being replaced by plastic or composite material in the automotive industry to minimize costs and increase fuel efficiency. Steel is also a major substitute for aluminum in the transportation and construction industries. In addition, copper is substituting aluminum in the power sector due to its high conductivity. The rising consumption of glass and paper in packaging can further pose a threat to aluminum producers. However, owing to its superior properties such as high strength-to-weight ratio, corrosion resistance, and durability, aluminum is expected to play a key role in several industries.
Bargaining Power of Suppliers
The bargaining power of suppliers is expected to be high in the global aluminum market. The market is fragmented with organized and unorganized players, resulting in an undersupply for several years; however, there was an oversupply in 2016 for one year due the illegal production and supply of aluminum in China. Bans enforced by the Chinese government in 2017 have improved the global market scenario. Considering the historic export data and current demand, the consumption of aluminum has grown, year on year. Furthermore, the governments of different countries are encouraging aluminum recycling manufacturers to increase production and explore untapped markets. Thus, the bargaining power of suppliers is expected to be considerably high during the forecast period.
Bargaining Power of Buyers
The bargaining power of buyers is projected to be moderate as there are numerous choices available due to different substitutes; buyers can also demand customization suited to their requirements. The availability of the material with a large number of suppliers at negotiating price can increase consumption of aluminum. However, the fragmented market may lead the moderate bargaining power of the buyers.
