Commodity Information: Aluminum & Zinc

The market in the metal industry is constantly evolving – and so are commodity prices. The IKB Deutsche Industriebank releases a quarterly report focusing on the stocks and prices of aluminum and zinc. The most significant developments in the third quarter of 2023 are highlighted in the current report.

aluminium inventories chart — Development of aluminium inventories since 2017 in million tonnes.

Aluminium developments and forecasts

The global primary aluminum production was up by 1.4 percent from the previous year's level by the end of July 2023. Chinese production cooled off recently and by the end of July was only 2.1 percent higher than the previous year.

The expansion of electric mobility, the ramp-up of renewable energies, and the trend towards lightweight construction will support the demand for aluminum in the long run. However, to meet these demands, an increase in recycling production is particularly necessary.

Inventory trends varied in August: At the LME, aluminum stocks rose slightly, reaching nearly 516,000 tons by the end of August. This puts them at the LME 85 percent above the low level of the previous year. On the other hand, at the SHFE, stocks continued to decline, currently below 100,000 tons. Comex's stock levels were around 19,000 tons at the end of August. Only 1,920 tons of recycled aluminum are stored at the LME.

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Investment demand was 40 percent higher than the previous month; compared to the previous year, the number of trade contracts only increased by 16 percent. The price for primary aluminum on average was just below the previous month's value. The price drop for Aluminum Alloy was 12 percent compared to the previous month.

Trend: For the primary aluminum price, we anticipate a fluctuation of plus or minus 300 US dollars around the value of 2,300 US dollars per ton by the end of the year.

aluminium prices chart — Development of aluminium prices since 2017 in US dollar per tonne.

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zinc inventories chart — Development of zinc inventories since 2017 in thousand tonnes.

Zinc developments and forecasts

Zinc mine production in the first half of 2023 was 0.7 percent below the previous year's level, primarily due to adverse weather conditions in Canada, Sweden, and Australia. However, refinery production increased and was 2.7 percent higher than the previous year, driven by strong Chinese production. Production declines in Europe, Canada, and Japan were offset by this.

Zinc consumption increased in China, India, and the USA, and despite decreases in consumption in Europe, Brazil, and Taiwan, it was 0.9 percent above the previous year's level. The increased refinery production and the moderate increase in consumption could lead to a supply surplus this year.

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Zinc inventories at the LME rose sharply in August and, after reaching lows at the beginning of the year, now stand at nearly 154,000 tons, which is double the previous year's level. At the SHFE, stocks decreased to just over 43,000 tons. However, compared to the end of the previous year, the inventories have doubled.

Trend: We anticipate the zinc price to be at 2,500 US dollars per ton by the end of the third quarter of 2023, with a range of plus or minus 500 US dollars.

zinc prices chart — Development of zinc prices since 2017 in US dollar per tonne.

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