12/14/2023 Markets & Industries Report

Commodity Information: Aluminum & Zinc

The market in the metal industry is constantly evolving – and so are commodity prices. The IKB Deutsche Industriebank releases a quarterly report focusing on the stocks and prices of aluminum and zinc. The most significant developments in the fourth quarter of 2023 are highlighted in the current report.

Development of aluminium inventories since 2017 in million tonnes.

Aluminium developments and forecasts

By the end of October 2023, global production of primary aluminium was 2.1 percent higher than in the same period of the previous year. We anticipate primary aluminium production of around 70 million tonnes for the year as a whole. In China and North America, production increased by more than 3 percent year-on-year.

Inventories on the LME continued to fall over the course of November 2023. At 435,000 tonnes at the end of the month, they were at their lowest level since February of this year. Stocks correspond to the total consumption of only around two and a half days.

Demand for aluminium is generally benefiting from the global expansion of renewable energies and e-mobility as well as the trend towards lightweight construction. In order to be able to meet this demand in the future, both primary aluminium capacities and recycling production capacities must be expanded.

Development of aluminium prices since 2017 in US dollar per tonne.

We expect global primary aluminium production to increase to 75 million tonnes by 2027. As in the previous month, investment demand has once again fallen significantly by around 24 percent.

The average price for primary aluminium in November was almost unchanged compared to October, with continued low volatility. Prices for recycled aluminium, on the other hand, rose by 13 percent at the end of the month, narrowing the gap to primary aluminium somewhat.

Trend: For the price of primary aluminium, we see a movement of plus or minus 300 US dollars around the value of 2,300 US dollars per tonne by the end of the first quarter of 2024.

Development of zinc inventories since 2017 in thousand tonnes.

Zinc developments and forecasts

Following the decline in zinc mine production in the previous year, only a marginal recovery is expected for 2023. For 2024, production expansions in Australia and Russia in particular are expected to lead to an increase of 3.9 percent. Following the decline in the previous year, global refinery production is expected to increase by 3.7 percent to 13.84 million tonnes in 2023 and by 3.3 percent to 14.3 million tonnes in 2024.

China will be the main driver with an increase of 6.7 percent (2023) and 4.1 percent (2024). Growth is also expected in Australia and Norway. In contrast, production in Europe is expected to continue to decline in 2023.

Development of zinc prices since 2017 in US dollar per tonne.

As zinc consumption is only expected to increase by 1.1 percent to 13.59 million tonnes in 2023 and by 2.5 percent to 13.93 million tonnes in 2024, a supply surplus is currently expected for both years.

Zinc inventories on the LME increased more than two and a half times over the course of November 2023, reaching their highest level since September 2021. On the SHFE, however, zinc inventories averaged around 21,400 tonnes in November, the same level as the previous month. The supply situation for zinc has improved significantly to seven days' supply.

Trend: We see the zinc price at 2,500 US dollars per tonne by the end of the first quarter of 2024, within a range of plus or minus 500 US dollars.