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Short Term Commodity Outlook April 2023: Aluminum and Zinc
The market in the metals industry is constantly on the move - and so are commodity prices. IKB Deutsche Industriebank publishes a monthly report that focuses on the inventory and prices of aluminium and zinc. The most important developments in April 2023 are highlighted in the current report.
Development of aluminium inventories since 2017 in million tonnes.Aluminium developments and forecasts
In the first two months of this year, primary aluminium production was 2.9 per cent above the previous year's level, with Chinese production 4.8 per cent higher.
The trend towards lightweight construction will continue to dominate the demand side this year. The use of aluminium in cans and disposable packaging will also develop stably.
On the supply side, the level of the electricity price will influence European production in particular. The expansion of recycling production must therefore be expanded against the backdrop of rising demand and the need for resource and energy efficiency.
Development of aluminium prices since 2017 in US dollar per tonne.On the LME, inventories decreased slightly to 520,900 tonnes during March. At the SHFE, aluminium inventories at the end of the month were below the level of the end of February at just under 286,000 tonnes, after higher inventories were observed in the middle of the month.
In COMEX warehouses, stocks were increased and now stand at just under 30,000 tonnes. The number of trading contracts stagnated in March. Prices for primary and recycled aluminium were on average and at the levels of the previous month.
Trend: For the primary aluminium price, we see a movement of plus 500 US dollars around the 2,400 US dollar per tonne level by the end of the second quarter, with aluminium alloy prices averaging around 300 US dollars per tonne lower.
Development of zinc inventories since 2017 in thousand tonnes.Zinc developments and forecasts
In January 2023, zinc mine production was 1.5 percent higher than in January of the previous year. Refining production, on the other hand, declined by 4.6 per cent. Consumption was also down, by 1.6 per cent.
On the LME, zinc stocks rose slightly in March 2023, jumping to 45,000 tonnes on the last reporting day. On the SHFE, on the other hand, inventories fell back to 97,345 tonnes after building up in February.
On the COMEX, only 3,000 tonnes remain in storage. The stocks are sufficient for just under four days' consumption. However, if consumption picks up in the next few months, the supply situation may deteriorate again.
Development of zinc prices since 2017 in US dollar per tonne.Overall, demand for zinc in the next few years will be shaped by corroding protection requirements. Demand will come from the renewable energy sector, the automotive industry and the construction industry.
Trend: We see the zinc price at 3,000 US dollars per tonne in a range of plus or minus 500 US dollars per tonne by the end of the first half of the year.
