Recovery of global aluminium demand depends on interest rates in the US and Europe

Recovery in global aluminium demand depends on interest rates, mainly in the United States and Europe, while the global scenario remains challenging

This is the opinion of Luciano Alves, Companhia Brasileira de Alumínio’s (CBA) chief executive officer, who spoke on the topic during the company’s earnings call on Friday March 8.

According to Alves, low demand continues to pressure the markets all around the world.

“The variable in question is demand. We depend on signs of improved demand in developed markets. Furthermore, the construction sector in China accelerated more slowly than expected after the reopening of markets with the end of the lockdown, which also contributed to cooler demand,” the CEO said.

Despite the challenging scenario for demand in the short term, in the medium and long term the acceleration of demand related to the energy transition in China could boost aluminium prices, Alves said.

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Regarding Brazil, he said that the situation is not that bad, with demand remaining favorable in the domestic market. In the fourth quarter, aluminium demand in the Brazilian market performed well – even better than the third quarter of last year, and at the same level as the fourth quarter of 2022 – reflecting stable economic conditions in the country, according to the earnings report, published on Thursday March 7.

According to the earnings report, the construction sector performed well in the fourth quarter, mainly due to improved and easier financing conditions, and in the consumer goods sector there was also a significant improvement, driven by greater demand for air conditioning and household appliances in general.

CBA also stated in the earnings report that there was an increase in production volume, reaching 86,000 tonnes of liquid aluminium production in the fourth quarter, up by 3,000 tonnes compared with the third quarter of 2023.

In the fourth quarter, sales of primary aluminium totaled 77,000 tonnes, an increase of 15% compared with the third quarter (67,000 tonnes) and an increase of 24% compared with the fourth quarter of 2022 (62,000 tonnes). This was the company’s best quarter of the year in terms of sales volume and in comparison with both periods.

Fastmarkets’ assessment of the aluminium P1020A premium, low-VAT market, delivered São Paulo region was $220-250 per tonne on Tuesday March 5.

Meanwhile, the aluminium P1020A premium, high VAT market, delivered São Paulo region assessment was $150-175 per tonne on the same day.

These are new premiums that better reflect the two-tier market created by the different state value-added tax (VAT) rates in Brazil. This is the first week that Fastmarkets assessed premiums for the low- and high-VAT markets, replacing its previous premium, MB-AL-0021.

Aluminium’s cash/three-month spread on the London Metal Exchange was most recently in a $44.04 per tonne contango. Market participants in the European physical market noted some support from wider spreads and a recent improvement in sentiment out of Asia.

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