Aluminum Market

Market Overview

The global aluminum market size was valued at USD 150 billion in 2021. It is projected to reach USD 255 billion by 2030, growing at a CAGR of 6.1% during the forecast period (2022–2030). Factors such as flourishing construction activities in Asia-Pacific and increasing demand for aluminum from Food & Packaging and Pharmaceutical Industries drives the aluminum market demand by 2030.

The element aluminum has a silvery-white sheen, is non-magnetic, and is ductile by nature. The symbol for it is Al, the most prevalent metal in the planet's crust. The aerospace, electrical, and packaging industries, among others, are showing strong demand for the metal. A market driver is the increased demand for packaged goods and vehicle manufacturers' rising use of aluminum instead of stainless steel. The growing demand for electric vehicles and O.E.M. producers also fuel the market expansion.

Market Dynamics

Flourishing Construction Activities in Asia-Pacific

The construction industry in ASEAN countries and India represents one of the fastest-growing markets and is anticipated to account for a significant share of the global construction market. Asia-Pacific countries, namely Indonesia, Singapore, Thailand, Vietnam, the Philippines, and India, have witnessed robust growth in construction activities. The Indian real estate industry will likely reach USD 1 trillion by 2030, contributing approximately 13% to the country's GDP.

Furthermore, according to the Department for Promotion of Industry and Internal Trade (DPIIT), construction development and infrastructure activities sectors received FDI inflow amounting to USD 25.69 billion and USD 16.97 billion, respectively, between April 2000 and June 2020. The South Korean government had announced plans to construct 35,000 housing units in the first phase of its 300,000-unit housing project, which was completed by 2018. Owing to the factors mentioned above, the demand for aluminum from the construction sector will likely increase in the region during the forecast period.

Swelling Demand for Aluminum from Food & Packaging and Pharmaceutical Industries

The primary factor that boosts the growth of the aluminum market is the rising demand for aluminum from the food & packaging and pharmaceutical industries, as it is non-toxic, preserves food for prolonged periods, and inhibits the growth of microorganisms.

Packaging is one of the most important factors taken into account by businesses in the manufacturing sector to guarantee customer aesthetic appeal. The global packaging market is expanding rapidly due to the expansion of manufacturing facilities, food processing facilities, and industrial production. Furthermore, packaging requirements have significantly increased due to the e-retail industry and demand from the food and beverage sector.

In addition, the growing penetration of retail pharmacies in developing regions and an increasing focus on brand enhancement and product differentiation by pharmaceutical manufacturers are also driving the demand for aluminum. Moreover, the focus of various governments on strengthening healthcare facilities and insurance coverage is further expanding the demand for pharmaceuticals, which, in turn, is boosting the market growth.

Increasing Popularity of Secondary Aluminum 

Al may be recycled into many items, including tractor-trailers and automotive bodywork. Aluminum cans, however, typically evolve into new cans made of the same metal. Additionally, recycling secondary aluminum doesn't degrade the metal's purity, allowing for endless recycling. The ongoing demand for these cans contributes to the rising metal consumption. Recycling cans relieves pressure on landfills and conserves energy and natural resources. Nearly 95% less energy is required to produce cans from recycled metal than it is to produce them from bauxite ore. Only 5% of the energy needed to make new aluminum is needed to produce recycled aluminum.

Market Restraint

Decline in the Automotive Industry

The automotive industry has been observing a downfall for a few years, restraining the market. The International Monetary Fund (I.M.F.) has pegged the automotive industry as a significant factor in the overall lagging of industrial output. A prolonged contraction period in the sector would only affect the global economy for a more extended period in the short and long run.

According to OICA data, automotive production registered a decline of 16% in 2020 to reach less than 78 million vehicles, which was equivalent to 2010's sales levels. In the Americas, 15.7 million units were produced in 2020, representing a 20% share of the global production. The NAFTA region observed a decline in output by more than 20%, with US manufacturing declining by 19%. South America alone dropped by more than 30%, with Brazil on top of the infamous list with a drop of almost 32%.

Considering the downward trend in the automobile industry, which is an employer of aluminum for various applications, the aluminum market is affected considerably. The impact is estimated to remain for the short and mid-term in the future.

Increased Environmental Regulations

As environmental issues have become more severe and public expectations for government action to minimize pollution have grown, several nations worldwide have been forced to implement new legislation. Market expansion is anticipated to be constrained by governments and organizations enforcing such strict environmental restrictions.

A new set of regulations has also been introduced in numerous nations as a result of growing environmental concerns and greater expectations from the populace to reduce pollution levels. Due to the increased emission requirements, smelting processes must be more expensive. In addition, consumers' awareness and concern about environmental health have grown over the past ten years.

Market Opportunities

Recyclable Properties of Aluminum

Aluminum is 100% recyclable without loss of its properties. The property of recyclability means that the world's increasing stock in the use of aluminum will act as a resource bank, over time delivering more and more valuable service and value from the energy embodied in the metal at the time of its production. Recycling the currently stored aluminum would equal up to 24 years' worth of current annual primary aluminum production. This property of aluminum makes it a good choice over other substitutes that cannot be recycled and creates opportunities for market growth.

Regional Analysis

Predominance of Asia-Pacific.

Region-wise, the global aluminum market share is segmented into North America, Europe, Asia-Pacific, and LAMEA. 

Asia-Pacific accounts for the largest market share and is estimated to grow at a CAGR of 3.7% during the forecast period. According to the Civil Aviation Administration of China (CAAC), China is the biggest aircraft producer and the largest market for domestic air travelers. The demand for aluminum will rise further due to the nation's growing civil aircraft fleet over the past five years. Aluminum foils are also used in packaging tablets, capsules, creams, lotions, liquid pharmaceuticals, and powder drugs.

China's packaging market is anticipated to increase significantly. This encouraging momentum in the packaging sector will ignite the country's aluminum market. China's food processing sector is also maturing and expanding moderately. Foods processed and packaged for freezing are becoming increasingly popular, especially dairy, baby food, and confectionery products. These products are expected to drive the food processing industry, which will fuel the packaging market and boost aluminum demand in the country.

Europe is the second-largest region and is estimated to reach a predicted value of USD 25 billion by 2030, growing at a CAGR of 5.7%. Construction is a highly prioritized industry for the government of the United Kingdom. The government had promised to build about 1,000,000 homes by 2020. Moreover, total investments in the construction sector between 2017 and 2021 were worth USD 383 billion. The new construction orders grew by 12.2%, around GBP 1,227 million in the first quarter of 2021 compared to the previous year’s fourth quarter. All such growth depicting factors in the construction sectors are likely to drive the market demand for aluminum in the construction sector.

North America is the third-largest region. Due to the use of cutting-edge technology, an increase in the number of Research & Development centers, and growing consumer demand, the U.S. electronics market is currently the largest in the world. The market will continue to expand due to the ongoing investments in the electronics industry, leading to increased aluminum consumption in the U.S. Due to the accelerated pace of innovation, the development of technology, and R&D operations in the electronics industry, there is a great demand for newer and quicker electronic devices. In the United States, there is a sizable demand for packaging, driven mainly by the expanding demand from the flexible packaging sector. The need for packaging is anticipated to rise significantly throughout the forecast period due to the government's improved emphasis and investments in numerous industries. With the growing demand from various end-user industries, the aluminum market is expected to grow faster during the forecast period.

North America is the third-largest region. Due to the use of cutting-edge technology, an increase in the number of Research & Development centers, and growing consumer demand, the US electronics market is currently the largest in the world. The market will continue to expand due to the ongoing investments in the electronics industry, leading to increased aluminum consumption in the US. Due to the accelerated pace of innovation, the development of technology, and R&D operations in the electronics industry, there is a great demand for newer and quicker electronic devices.

In the United States, there is a sizable demand for packaging, driven mainly by the expanding demand from the flexible packaging sector. The need for packaging is anticipated to rise significantly throughout the forecast period due to the government's improved emphasis and investments in numerous industries. With the growing demand from various end-user industries, the aluminum market is expected to grow at the fastest rate during the forecast period.

Segmental Analysis

The global aluminum market share is segmented by processing type, end-user, and region.

Processing type-wise, the global aluminum market is segmented into Castings, Extrusion, Forgings, Pigments & Powders, Rod & Bar, and Sheet & Plate.

The Extrusion segment dominates the global aluminum market and is expected to grow at a CAGR of 6.9% during the forecast period. Extrusion has umpteen applications in architecture, automotive, electronics, aerospace, energy, etc. Building & construction is the largest industry for extruded aluminum. It can be found in aluminum railings, staircases, and panels to aluminum framing components. They have increasingly replaced traditional iron, concrete, and timber components in construction and building. Furthermore, extruded aluminum is used in display equipment, electronic systems, and industrial applications. The above factors will likely affect the demand for extruded aluminum during the forecast period.

Castings are the second-largest segment. Casting is the most extensively used process of shaping aluminum into goods. The versatility of aluminum castings allows them to be used in various applications and environments. It is used in the military and defense sectors, where near-net-shape precision castings with tight tolerances are critical. It is also used in building & construction, electronics, and other industries. The above factors will likely affect the demand for non-ferrous powder metals during the forecast period.

Forgings are the third-largest segment. Forged aluminum is commonly used in high-performance automobiles and aircraft for gears, drive lines, and wheel spindles. Forged aluminum is ideal for aerospace applications due to its low density, as aerospace requires robust and resilient structures, is lightweight, and sustains extreme conditions. Furthermore, forged aluminum is used in various applications such as railway, oilfield, mining, forestry & agriculture, and others. The above factors will likely affect the demand for forged aluminum during the forecast period.

End-user-wise, the global aluminum market is segmented into Automotive, Aerospace & Defense, Building & Construction, Electrical & Electronics, Packaging, Industrial, and Others.

The Building & Construction segment dominates the global aluminum market and is expected to grow at a CAGR of 7% during the forecast period. Aluminum is the second most commonly utilized metal in construction and building. It is widely used for windows, curtain walls, roofing, cladding, solar shade, solar panels, handrails, stairways, shelves, and other temporary structures. It is also used to construct high-rise buildings, skyscrapers, and bridges. The minimum service life of aluminum structures is 80 years. Aluminum can be used in any climatic conditions and does not lose its properties in temperatures between –80 °C and +300 °C. Aluminum structures can be slightly prone to fire damage, but the metal becomes even more potent at low temperatures. All these factors are driving its usage in the building & construction industry. 

Automotive is the second-largest segment. Aluminum is widely used in the automotive industry. Automotive parts such as engine radiators, wheels, bumpers, suspension parts, engine cylinder blocks, transmission bodies, and body parts like the hoods, the doors, and even the frame, are made from aluminum. It is also favored for exteriors due to its lightweight, durability, and attractive appearance. Furthermore, as the automotive industry is focused more on fuel efficiency and reducing CO2 emissions, aluminum plays a more critical role in modern cars. The weight of a vehicle is reduced by one kilogram for every kilogram of aluminum used. Therefore, aluminum is used to make an increasing number of automotive components, fueling industry demand.

Electrical & Electronics is the third-largest segment. Aluminum is widely used in applications, such as main overhead power lines and household electrical appliances like smartphones, tablets, laptops, flat-screen TVs, monitors, and other equipment. Manufacturers are successfully using aluminum to replace steel and plastic. It is more robust and reliable than plastic and lighter than steel. The electrical & electronics industry is expanding for various reasons, such as increasing population and infrastructural activities, rising living standards and middle-class per capita income, and increasing replacement of conventional lighting.

Recent Developments

• In January 2023, the Wesselman Woods boardwalk extension and the preservation of a rare environment are supported by an Alcoa Foundation grant.
• In January 2023, One Phipps Plaza is now home to Novelis' North American and global corporate headquarters.
• In January 2023, China's Taicang Hydro plant received A.S.I. accreditation.
• In January 2023, The Brazilian Development Bank approved a dollar-indexed loan for the Boa Sorte solar project from Hydro Rein and Atlas Renewable Energy.
• In November 2022, RUSAL will develop a brand-new aluminum alloy for use in space.