Aluminum fell in price last year, as did steel, nickel, and copper. Expensive energy resources increased the cost of its production, but did not increase demand due to problems in the leading economies of the world.

The cost of aluminum began to fall from the end of March, before reaching $ 3,750 per ton. But the collapse was serious and in October the non-ferrous metal was already trading within $ 2,100.

  • Almost a double fall occurred for a number of reasons:
  • Pandemic restrictions in China.
  • Reducing the demand for aluminum in the world.

Increase in energy consumption for the production of finished products from aluminum.

Each reason might not have led to a collapse, but with joint action we see such a picture. The PRC reacted harshly to coronavirus outbreaks, limiting the movement of citizens and the economic activities of enterprises as much as possible. This led to a decrease in GDP, a decrease in consumption, and problems in the construction industry. But China is the main consumer of aluminum in the world, however, as well as steel, copper, etc.

They mainly buy their own metal produced at their own factories, but with a decrease in demand, its surpluses enter the world market and put pressure on prices. That is, the lockdown in China is a clear sign that the cost of aluminum will fall, which we have seen over the past year.

China forms the main demand and any problems in its economy lead to a collapse in prices for non-ferrous metal. The slowdown in GDP growth in 2022 did not enter the negative zone, but strongly influenced the global state of the global financial system. They began to buy less aluminum in the USA, Europe, Russia, and other countries, which is associated with the recession. This was caused, among other things, by the restriction in the use of credit resources — leading central banks raised rates all year, which closed the era of "free" money.

The increase in the cost of energy resources, primarily gas, has led to an increase in the price of aluminum smelting and its products. This lowered the demand for finished products and, accordingly, reduced sales — aluminum became less in demand, which led to its cheapening.

The fall at the end of March is due to the next lockdowns in China, as well as the absence of sanctions against the aluminum industry in Russia from the United States and Europe, which reassured buyers — prices went down.

Aluminum Sales Leaders in Russia
Rusal. The company is the owner of aluminum and alumina production plants in Russia (Bratsk, Krasnoyarsk, Volgograd, Novokuznetsk, Krasnoyarsk, Kaments-Uralsky, Nadvoitsy, etc.) and abroad. It belongs to the largest manufacturers.
Kandalaksha Aluminum Plant (JSC KAZ). Located in the Murmansk region, in the city of Kandalaksha, aluminum and aluminum alloys are produced.
Boguchansky Aluminum Plant (JSC BoAZ). Located in the Krasnoyarsk Territory, Boguchany village, primary aluminum is made.
Sayanogorsk Aluminum Plant (SAZ). Location — Republic of Khakassia, Sayanogorsk, producer of primary aluminum.
JSC Ankuver. The company is located in Primorsky Krai, Vladivostok, specializing in the production of high—alloy aluminum alloys.
Permtsvetmet LLC. Location — Perm, produces alloys for the automotive industry, manufactures alloys for deoxidation in ferrous metallurgy.

In terms of aluminum smelting volumes, the Russian Federation is among the leading countries.

In the first days of January 2023, the price of aluminum fell, which is due to the holidays, a decrease in business activity. But having reached local lows, the quotes began to rise sharply and were fixed around $ 2500. This was influenced by the events in China, which abandoned the zero tolerance policy and now, with outbreaks of covid, there will be fewer restrictions, which is good for the economy.

Another reason for the growth is forecasts from influential agencies, for example, from Goldman Sachs, which talk about raising prices to $ 3,750. The reason: the minimum reserves are only 1.4 million tons, which is the worst indicator in the last 20 years. This was influenced by the increase in demand, which is observed today from China and Europe: cheaper energy resources, reduced cost and, accordingly, increased sales of finished products are to blame.

The fall in energy prices is changing the policy of aluminum giants, which are starting to put into operation aluminum plants that have stopped due to high gas prices, which are traditionally very energy-intensive. For example, this is what the American aluminum corporation Alcoa did, which stopped the work of the Spanish San Ciprian plant in 2021 for this reason, and is now launching it again.

The Russian market follows the rest of the world, the value of the metal rises slightly, reaching resistance levels. We said that restrictions on aluminum exports to unfriendly countries were not introduced, so their impact in 2022 is small.

However, everything may change in the near future — disappointing news comes from Bloomberg that the US administration is going to impose a 200% duty on Russian non-ferrous metal, thereby completely stopping its entry into the US market. The monthly volume of exports from Russia to this country is 10 thousand tons — in annual equivalent it is 120 thousand tons, which is quite a lot, especially considering that obedient Europe can follow them.