The European Aluminium Ingot Market Shows Dismal Behavior in Q4 2022

Germany: Aluminium Ingot prices in the European market have slowed towards the end of the second week of November 2022. According to players, anxiety has settled across the European Aluminium Ingot market. Following a solid first half of 2022, the demand for Aluminium Ingot has weakened in the face of a gradually bleak outlook for the production industry in the first half of 2023.

According to our sources, there is widespread concern in Europe that manufacturing activity is about to plummet. Most Aluminium Ingot participants have yet to feel the effects of massive power cost increases, but they will in the first and second quarters of 2023, and no one is offering fixed power contracts. Although spot energy prices have fallen in the last month, they remain significantly higher than the levels paid by Aluminium Ingot producers under previous term agreements, the majority of which, according to market participants, will expire in the new year.

Suppliers claim that even if spot prices fall further in the near term or the European governments impose energy price caps, Aluminium Ingot manufacturers will face significant price increases for their power needs. Power costs are falling, but they remain a primary concern owing to supply issues in France, where only half of the nuclear capacity is operational. In contrast, natural gas supplies have been lowered, and the energy regulator has recently urged residential and industrial users to reduce power consumption to avoid winter blackouts.

When the order for Aluminium Ingot fell in the third quarter, several manufacturers were unprepared because they had over-booked for the possibility of further price increases. Nearby Aluminium Ingot demand suffers from falling end-user appetite and high consumer stockpiles. For the time being, many Aluminium Ingot buyers are attempting to push back deliveries of scheduled stocks for the fourth quarter into next year.

A sustained period of low demand could result in significant changes in supply markets, particularly in Europe, where high power costs have already decimated output. According to market participants, "European Aluminium Ingot prices could fall even further, and what falls is not guaranteed to rise again." Manufacturers may only have operational smelters in Europe by the end of next year outside of Scandinavia. As a ripple effect of higher energy prices and operating costs amid disrupted supply chains, ChemAnalyst predicts that Aluminium Ingot prices will surge in the upcoming months.