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3/18/2024
Markets & Industries
Report
Short Term Commodity Outlook March 2024: Aluminum and 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 first quarter of 2024 are highlighted in the current report.
Aluminium developments and forecasts
Last year, global primary aluminium production rose by 2.3 percent to 70.6 million tonnes, setting a new record. The increase in Chinese production was the driver of global growth last year.For the coming years, we expect moderate growth in primary production, which will rise to 75 million tonnes by 2027.
Aluminium inventories on the stock exchanges rose sharply in February 2024. In particular, stocks in SHFE warehouses increased sharply and stood at 190,000 tonnes at the end of the month. Traditionally, stocks on the SHFE rise in February around Chinese New Year, when factories are closed and do not call off any raw materials.
The monthly average price of primary aluminium rose slightly in February 2024. Prices fell towards the end of 2024. The price of recycled aluminium fell slightly in February after rising in recent months. The number of trading contracts rose by a good quarter.
At 69,184 tonnes, aluminium consumption in 2023 as a whole was slightly higher than in the previous year. The increase in production described above, combined with only slightly higher aluminium consumption due to the economic slowdown, resulted in a supply surplus of around 600,000 tonnes. A slight oversupply is also expected for this year.
Trend: For the primary aluminium price, we see a movement of plus or minus 300 US dollars around the value of 2,200 US dollars per tonne by the end of the second quarter of 2024.
At 69,184 tonnes, aluminium consumption in 2023 as a whole was slightly higher than in the previous year. The increase in production described above, combined with only slightly higher aluminium consumption due to the economic slowdown, resulted in a supply surplus of around 600,000 tonnes. A slight oversupply is also expected for this year.
Trend: For the primary aluminium price, we see a movement of plus or minus 300 US dollars around the value of 2,200 US dollars per tonne by the end of the second quarter of 2024.
Zinc developments and forecasts
In 2023, global zinc mine production fell by 1.4 percent. For 2024, production expansions in Australia and Russia in particular are expected to increase zinc mine production by 3.9 percent. In the same period, refinery production rose by 3.8 percent, driven by production increases in China (plus 7.7 percent) and Australia (plus 15.2 percent). Excluding Chinese output, the increase in global zinc refinery production amounted to just 0.3 percent.
The 1.7 percent increase in global zinc consumption is also largely attributable to China, but also comes from India. In the rest of the world, zinc consumption fell by 3.2 percent.
Zinc inventories on the LME fell in January 2024 after rising in November 2023. Inventories rose again in February and were almost at the high of mid-December 2023 at the end of the month. Zinc inventories on the SHFE tripled and stood at just under 90,000 tonnes at the end of the month.
The supply situation for zinc is stable due to the build-up of stocks. The supply surplus, which has accumulated due to the stronger increase in refined metal production than consumption, will also be observed in 2024.
Trend: We expect the zinc price to move around the 2,400 US dollars per tonne mark in a range of plus or minus 500 US dollars by the end of the second quarter of 2024.
The supply situation for zinc is stable due to the build-up of stocks. The supply surplus, which has accumulated due to the stronger increase in refined metal production than consumption, will also be observed in 2024.
Trend: We expect the zinc price to move around the 2,400 US dollars per tonne mark in a range of plus or minus 500 US dollars by the end of the second quarter of 2024.
