European Aluminium Ingot Prices Have Skyrocketed Amidst an Uncertain Demand Outlook

Germany: Aluminium Ingot prices in the European market witnessed an unprecedented surge due to rising concerns about energy prices and cost pressures amidst uncertain terminal demand. Since the third quarter began, Aluminium Ingot prices have remained volatile and face production challenges owing to ongoing concerns about energy prices and trade flow disruptions while showcasing mixed downstream demand.

According to our sources, market participants are concerned about further production cutbacks in European alumina refineries and Aluminium smelters due to soaring energy costs. Furthermore, suppliers claim that Australian alumina prices were highly volatile in September and that shipments out of Western Australia were delayed due to heavy rain. In the European market, refinery and smelter maintenance plans have not returned to normal levels since the pandemic began. However, European suppliers assure that some additional supply will be available in the market soon, as Indonesia's Bintan Alumina refinery began production in September, doubling its capacity to 2 million MT/year. Given the uncertainty in the fundamentals, market participants expect output concerns and sentiment to guide near-term prices of Aluminium Ingot.

In response to the lower demand for Aluminium Ingot in the European market, Norsk Hydro will reduce annual primary Aluminium production capacity across two of its operations by more than 105,000 MT by the end of the year. Aluminium Ingot demand is expected to fall in the near term.

Several European alumina refineries and Aluminium smelters have already reduced their output, and others are considering their options. However, alumina refineries and downstream aluminium companies have begun to feel these cost pressures as the quarter progresses, creating supply-demand uncertainty in Europe. According to our sources, reduced Aluminium smelter operations and associated weaker alumina demand can offset potentially more significant Aluminium Ingot supply disruptions in Q4. Rising inflation and higher central bank interest rates in Europe, Australia, and the United States will also pressure the demand for Aluminium products in the fourth quarter. As a result, Chemanalyst expects Aluminium Ingot prices to remain high in the upcoming weeks.