With production at the normal level that resulted in large surplus in the market, sharp contraction in global aluminium consumption is likely to continue in the second quarter of the financial year 2020-21.
However, aluminium prices are receiving a support from financial deals. The first quarter of the FY21 also witnessed sharp reduction in the consumption following the impact of Covid-19.
Even in the domestic market, aluminium demand growth in India muted. Due to macroeconomic slowdown, the industry experts feel that near term outlook is negative.
According to World Bureau of Metal Statistics report, the calculated market balance for primary aluminium for January to May 2020 was a surplus of 908 KT that follows a surplus of 780 KT recorded for the whole of 2019. Demand for primary aluminium for January to May 2020 was 26.33 million tonnes, 285 KT more than in the comparable period in 2019.
The report added that production in January to May 2020 rose by 4.0 per cent. Total reported stocks rose during the first five months of the year to close at the end of the period 165 KT above the December 2019 level. Chinese output was estimated at 14789.8 KT based on higher availability of imported bauxite and alumina, and this currently accounts for about 54 per cent of the world production total.
Chinese apparent demand was 3.9 per cent higher than in January to May 2019 and the output of semi-manufactures rose by 6.4 per cent. China became a net importer of unwrought aluminium in 2020. During January to May 2020 Chinese net exports of aluminium semi manufactures were 1786 KT which compares with 2062 KT for January to May 2019.
Exports of semi manufactures fell by almost 14 per cent compared with the April 2020 total. In May 2020, primary aluminium production was 5449.2 kt and demand was 5387.8 KT.
