Aluminum Market

The global aluminum market is expected to grow substantially and register a CAGR of 6.71%, in terms of value, during the forecast period of 2018 to 2023. The increasing consumption of aluminum in China owing to rapid industrialization and large-scale bauxite mining is likely to propel the growth of the global aluminum market. Furthermore, increased construction in emerging markets is driving the demand for aluminum. In addition, the growing demand in the Middle East due to rising power consumption and the use of aluminum in offshore and on-shore oilfields is expected to augment market growth. However, environmental issues related to bauxite mining may hinder market growth during the forecast period. Also, the growing automotive industry in emerging markets is expected to offer lucrative opportunities to market players.

China is a major producer and consumer of aluminum, accounting for more than 60% of the global aluminum market in 2017. The growing demand for aluminum in China in various industries such as transportation, construction, packaging, and electrical has resulted in increased production. The production of automobiles in China is also high; the demand for lightweight materials, such as aluminum, for enhanced strength and performance is increasing in the automotive industry.

The Chinese government is focusing on developing infrastructure, especially the railway system to connect the major cities in the country. Aluminum is extensively used for developing machinery and equipment that are deployed in industries such as industrial manufacturing, textiles, energy, chemicals, and food & beverage.

The high consumption of power in China has led the government to rapidly expand its renewable energy generating capacity through the installation of solar power plants. The conductive properties and cost-effectiveness of aluminum make it a suitable choice in concentrated solar power (CSP) and photovoltaic (PV) mounting systems. These factors, along with the demand for conductors, wires, and cables in power transmission in China, are expected to drive the growth of the global aluminum market during the forecast period.

Die casting is considered an economical and efficient process to manufacture a broad range of shapes for automotive components. The most significant benefits of aluminum die cast products are that they produce lighter parts as compared to other die cast alloys, thereby improving fuel efficiency. Die cast aluminum also has the ability to withstand high temperatures and corrosion. The die cast finished parts can be produced with smooth textured surfaces that can be easily plated. They can be used in engine parts, stators, brackets, and gear boxes, among others. Die cast products also help in the protection of telecommunications, navigation, and other electronic features in vehicle systems. Moreover, with the growing stringency of environmental regulations regarding vehicle emissions, coupled with the need for fuel-efficient cars, is further expected to offer opportunities to manufacturers of aluminum die cast products. Furthermore, the growing per capita income in developing countries in Asia-Pacific has augmented the demand for automobiles which is further expected to fuel the demand for die cast products during the forecast period. According to the Organisation Internationale des Constructeurs d'Automobiles (OICA), automobile production in China stood at 29,015,434 units in 2017, an increase of 896,640 units from the previous year.

Bauxite is the major raw material in the production of primary aluminum. However, the mining of bauxite has an adverse effect on the environment and human health. Bauxite mining activities, such as site clearance, road building, open-pit drilling and blasting, loading and haulage, vehicular movement, and ore and waste rock handling, are major contributors to air pollution. Mining also affects the nearby water bodies due to leaching and contaminates the soil with heavy metals, which reduces soil fertility.

Several governments across Europe and North America are focusing on secondary/scrap aluminum to reduce environmental impact. In Europe, more than 90% of the aluminum used is from automobile scrap. In emerging economies such as India, China, and Brazil the governments are emphasizing the use of secondary aluminum despite the presence of vast bauxite reserves.

Hence, the focus on secondary aluminum to reduce the environmental impact of bauxite mining is expected to hinder the growth of the market.