When discussing the aluminium market, China is always the focal point as both the largest producer and consumer of aluminium globally. Prices for the metal are closely tied to developments there, and currently, there are signs of a slowdown in aluminium demand in China, which is poised to impact the global market.
Meanwhile, transformation processes are underway in the markets of other non-ferrous metals. For instance, Posco Future M is advancing the production of cathode materials with high nickel content for electric vehicle batteries, which is expected to boost nickel demand in the long term.
Consumption Growth in China Gradually Slowing
By the end of this year, the growth rate of aluminium consumption in China is expected to fall below 5%, compared to 6% in 2023. The domestic market presents a mixed picture: on one hand, the increased pace of power generation facility construction, infrastructure projects, and transport development is expected to sustain aluminium demand at approximately 43 million tonnes in 2024. In August, the share of aluminium consumption by the transport sector reached 20.1%, overtaking housing construction at 18.4%. The shares of the electric power and packaging sectors stood at 18.8% and 7.7%, respectively.
However, China faces significant economic challenges, notably a stagnant real estate market, which directly affects aluminium product orders and downstream production.
Overall, primary aluminium output in China is forecasted to reach 42.8 million tonnes in 2024, up from 41.6 million tonnes in 2023. Aluminium imports are expected to total 3 million tonnes, partly due to increased supplies from Russia. Imports from Russia could further expand if the US and EU authorities impose new sanctions on Russia, though discussions about banning Russian aluminium imports in the EU have not yet led to concrete actions.
Posco Continues Developing Cathode Material Production
South Korean company Posco Future M has begun early production of monocrystalline cathode materials based on nickel, cobalt, and aluminium for lithium-ion batteries, expanding its product line that includes nickel, cobalt, and manganese cathodes. The new materials, with a nickel content of 88%, offer high energy density and power output, which are crucial for electric vehicle batteries. Initially planned for launch in three months, production has commenced ahead of schedule.
This product launch aligns with Posco Future M's strategy to expand its cathode production capacity to 82,500 tonnes by 2025 and 248,500 tonnes by 2026. Posco Future M, a subsidiary of Posco Corporation, South Korea’s leading steelmaker, produced 36 million tonnes of steel in 2023 and aims to increase production to 52 million tonnes by 2030.
Posco is also diversifying into lithium mining and processing, acquiring the Salar del Hombre Muerto lithium deposit in Argentina in 2018 for $280 million from Australia's Galaxy Resources. Posco aims to create a complete lithium production cycle, from mining to battery manufacturing, advancing each stage of the process chain.
European Aluminium Industry Faces Competitiveness Challenges
The introduction of a cross-border carbon tax in the European Union in two years is expected to create serious challenges for the European aluminium industry, according to Paul Voss, CEO of the European Aluminium Association. The carbon tax will increase the cost of aluminium imports into the EU, raising costs for refiners and making European aluminium producers less competitive globally.
Additionally, the EU aluminium industry requires state support to manage high raw material and energy costs. Rising electricity tariffs, partly due to the shift from Russian pipeline gas to more expensive liquefied natural gas, have further compounded the situation. Last month, natural gas costs at the Dutch TTF hub were three times higher than in September 2019.
According to the International Aluminium Institute, primary aluminium production in Central and Western Europe fell by 28.6% to 2.71 million tonnes between 2010 and 2023, while production in Eastern Europe and Russia declined by just 5.6% to 4.02 million tonnes. A potential solution to this problem is state subsidies for aluminium smelters' electricity costs, which would help maintain profitability and competitiveness, countering Chinese and Middle Eastern producers' growing market share.
General Motors Expands Investment in Thacker Pass
US car manufacturer General Motors plans to invest $625 million in the Thacker Pass lithium project in Nevada, in collaboration with Canadian company Lithium Americas. Under the agreement, Lithium Americas will acquire a 38% stake in the project, while maintaining operational control of the remaining 62%.
General Motors' decision follows a revision of its electric vehicle production plans, similar to a move made by competitor Ford. Despite changes in timing, GM remains committed to an electric future, as reiterated by CEO Mary Barra.
Participation in the Thacker Pass project is crucial for GM to secure lithium supplies. The agreement allows GM to purchase 100% of the lithium produced during the first phase of Thacker Pass for 20 years and 38% during the second phase, also for 20 years.
GM is not the only US carmaker investing in lithium mining; Ford and Tesla are also pursuing similar strategies. Ford, for instance, signed long-term supply agreements with Albemarle, SQM, and Nemaska Lithium in May 2023.
Nickel Plant Construction Expected to Surge in the Philippines
The Philippines' Global Ferronickel Holdings is in talks with two companies to build a nickel smelter, though their identities remain undisclosed—one reportedly from Asia and the other from Europe. Currently, Global Ferronickel Holdings focuses on developing laterite deposits in the Philippines and exports the mined nickel ores to countries such as China. Its nickel ore production could reach 6.5 million tonnes per year.
The Philippines already hosts two nickel smelting plants owned by Nickel Asia Corporation. Global Ferronickel Holdings also holds a 20% stake in Guangdong Century Tsingshan Nickel Industry, one of China’s largest ferronickel producers.
Global Ferronickel Holdings’ plans reflect current market dynamics, with slowed nickel shipments from Indonesia leading to price changes. The Philippine government aims to attract foreign investors for nickel plant construction, similar to Indonesia's strategy, potentially leading to a boom in nickel smelting plants.
In the long term, increased competition between Indonesian and Philippine nickel suppliers is expected, which could exert downward pressure on nickel prices.
