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Market Overview

Our 2021 data show that primary aluminium production in Europe was lower than forecast, due to the ongoing energy crisis and resulting high prices. The semi-fabricated products (flat rolled products and extrusions) market, on the other hand, experienced a strong recovery.

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DIGITAL ACTIVITY REPORT 2021-2022

2021 in figures

History of primary aluminium production

Main producing countries and regions 1950 - 2021

  • Europe
  • USA
  • China
  • Others

High energy prices lead to curtailments in primary aluminium production

In 2021, European primary aluminium production (EU27+EFTA+UK) was forecast to increase by 3.1%. Unfortunately, during the 4th quarter of 2021, the energy price surge affected several European smelters, meaning production growth in 2021 went down by 1.9%.

During the COVID-19 crisis in 2020 and the first half of 2021, primary smelters successfully demonstrated their ability to navigate demand disruptions even though the costs (of idling a pot or temporary closing a smelter) are very high. However, the ongoing energy crisis and resulting high prices have aggravated an already very challenging situation. This has forced several EU smelters to cut capacity. From October 2021 to March 2022, Europe lost about 850 kt of primary production capacity[1], further contributing to a concerning long-term trend. In 2022, EU primary production is expected to further reduce by 30% versus 2021.

Since 2008, the EU has lost 30% of its primary production capacity, despite steadily growing demand for aluminium in Europe and globally.

Europe’s unique regulatory framework is central to this downward trend. However, the current energy price crisis has further spurred the loss of European production, with dramatic effects on both jobs and future investment plans and negatively impacting the EU’s overall strategic autonomy and climate-neutrality ambitions.

[1] Estimate based on our calculations using input from our members and analysis from the Metals Research team at Bank of America Merrill Lynch

EFTA
EU27+UK

   

European aluminium smelters at risk

Today, the total EU primary aluminium industry is comprised of 12 remaining smelters across 8 countries, representing a 3% global market share. One smelter was idled in 2021.

Including other European countries, the European primary aluminium industry comprises 23 smelters, with 10 smelters in Norway and Iceland and one smelter in the United Kingdom.

The ongoing energy crisis exacerbated by the war in Ukraine is a real threat to Europe’s remaining industry. The surge in energy prices is hitting European aluminium producers particularly hard, compared to both their global competitors in the aluminium sector and other raw materials sectors in Europe. The EU’s unique electricity market design and high costs compared to energy prices in many non-EU countries, put European aluminium producers at a significant financial disadvantage. 

 

EU imports dependency remains high

Last year, EU27 and UK import dependency in relation to aluminium ingots remained stable at 47%. In volume terms, EU net imports increased by 19% in 2021. Norway and Iceland, both part of the European Economic Area (EEA), are the largest exporters of primary aluminium to the EU. Other major exporters to European countries are Russia, the United Arab Emirates, and Mozambique.

EU27 and UK domestic production are fulfilled through both primary and recycled production. In 2021 the share of primary production decreased substantially from 17% to 14% while recycled production’s domestic market share increased from 36% to 39%.

Primary Production
Total Recycling
Net Import

Historical peak for EU exports of aluminium scrap in 2021

In 2021, EU27 and UK exports of aluminium scrap (HS 7602) surged by 32% - a historical peak. In total, more than 1.5 million tonnes of scrap were exported. The EU has been a net exporter of aluminium scrap since 2002.

Asia remains the destination for about 80% of EU aluminium scrap exports. These go predominantly to India, China, and Pakistan. In fact, in 2021, EU27+UK exports of aluminium scrap to India and Pakistan increased by 29% and 32% respectively. Despite new Chinese legislation banning the import of waste and scrap from other countries, EU27+UK exports of aluminium scrap to China (Hong Kong included) increased by 22% in 2021.

EU27+UK exports of aluminium scrap

Strong recovery of demand for flat-rolled products (13%) and extrusions (25%) in 2021

Following a COVID-19-driven decline in 2020, the demand for semi-fabricated aluminium (semi-processed aluminium ingots which must undergo further processing before being used in final applications) experienced a “V shaped” recovery in 2021. The demand for Flat Rolled Products (FRPs) and Extrusions recovered by almost 13% and 25% respectively in 2021.

The mobility market was one of the main markets affected in 2020 and experienced a strong recovery, particularly in the first half of 2021 (i.e., above 30%). During the second half of the year, demand from OEMs started to slow again due to the global shortage of semi-conductors and shipping capacity. Meanwhile, demand from the building & construction sector for both semi-fabricated aluminium products experienced a robust recovery in 2021. Strong growth in demand for extrusions was driven in particular by renovation schemes in various countries (e.g., Italy).

Finally, following resilient demand for aluminium in packaging solutions in 2020, demand remained very robust and continued to grow in 2021. This was driven in particular by growing consumer interest in sustainable and recyclable packaging; an area in which aluminium solutions have a key role to play (especially for beverage cans).

  • Packaging
  • Foilstock
  • Transport
  • Building and Construction
  • Technical applications
  • Consumer goods
  • Stockists
Flat Rolled Products Demand

Import share of flat-rolled and extruded products in the EU (2021)

EU27 and UK imports of semi-finished products increased by 11.3% for Flat Rolled Products (FRPs) and by 24% for Extrusions in 2021.

Following the successful European Aluminium anti-dumping case against aluminium extrusions from China, the Chinese share of imports continued to decrease. They reached 15% in 2021 versus 37% in 2019.

When it comes to FRP imports, 2021 data indicates a decrease in China’s market share from 25% in 2019 to 14% in 2021. However, it is important to note that while Chinese exports of FRPs to the EU strongly decreased in the first half of 2021, they started to rise once again in the second half of 2021 (following the announcement of a 9-month suspension of EU anti-Dumping measures against FRPs coming from China).

Switzerland and Norway, both part of the European Economic Area (EEA), are amongst the largest exporters of semi-finished aluminium products to the EU. Turkey and Russia are also major exporters to European countries, and last year both increased their market share of imports. Turkey’s market share for extrusion imports increased from 23% to 38%, while Russia’s rose from 8% to 12%, between 2019 and 2021.

  • Transport
  • General engineering
  • Electrical engineering
  • Building and construction
  • Consumer goods
  • Other
  • Stockists
Extrusions Demand

Focus EU27 + UK imports of aluminium products from China

China’s overcapacity and unfair trade practices remain an important challenge for the aluminium industry at a global level (e.g., primary overcapacity) but also at the European level (e.g., Chinese exports of semi and finished aluminium products).

China’s share of the EU27 + UK market for semi-fabricated products declined from a peak of 6% in 2019 (before COVID-19) to below 3% in 2021. The largest reductions in China’s share of the European market that we have identified are in the extrusions and FRP markets, due to EU anti-dumping investigations.

However, in 2021, total Chinese exports of aluminium products (i.e., HS 76) to the EU27 + UK only decreased by 1%.

Overall, the picture is mixed. On the one hand, the volume of some Chinese exports decreased significantly, e.g. aluminium foil (HS 7607) by 22%, extrusions (HS 7604+7608) by 46%, and flat rolled products (HS 7606) by 38% (despite a surge in the second half of the year because of the announced suspension). On the other hand, some Chinese exports to EU27 + UK increased strongly, e.g. by 23% for aluminium products such as aluminium structures (HS 7610) and by 38% for household articles (7615). On the latter, no anti-dumping measures are in place.

It should be noted that in Q3 2021, the European Commission decided to suspend EU anti-dumping measures against Chinese FRPs for 9 months with immediate effect. As a result, Chinese exports of FRPs (HS 7606) to the EU started to increase again at the end of Q2 and the beginning of Q3 2021, after the strong drop in Q1 and the beginning of Q2 2021.

Fundamentally, the issue of overcapacities in China has not changed, and it is likely that Chinese exports will continue to create continued pressure on European producers in the coming years. This is especially concerning, given the fact that domestic Chinese demand is expected to slow down as a result of the ongoing crisis in China’s building and construction sector.

Pie chart: EU27+UK imports of flat-rolled products (2021 data)

  • China
  • Switzerland
  • Turkey
  • Norway
  • Russia
  • Egypt
  • Serbia
  • South Africa
  • S. Arabia
  • Korea, South
  • Bahrain
  • Rest

EU28 imports of aluminium products from China

Last year, in the context of the COVID-19 crisis, Chinese exports of aluminium products (i.e., HS 76) to the EU28 decreased for the first time since 2013. Despite this severe decrease of Chinese exports to the EU for most aluminium trade codes in 2020e, it remains the case that for some aluminium codes (e.g., HS 7604+7608+7610), the decrease of Chinese exports to the EU was lower than the decrease of EU domestic production.

Moreover, China’s economic recovery from the pandemic appears to be quicker than in other regions (especially Europe). It is likely, therefore, that Chinese exports will bounce back to their previous levels more quickly and this will continue to increase the pressure on European producers.

Pie chart: EU27+UK imports of extrusions (2021 data)

  • China
  • Switzerland
  • Turkey
  • Norway
  • Russia
  • Egypt
  • Serbia
  • Morocco
  • Bosnia & Herzegovina
  • India
  • UAE
  • S. Korea
  • Rest
Others
Extrusions
FRP
Foil
Aluminium structures
Aluminium household articles

Aluminium production value chain in Europe

Europe’s complete aluminium value chain, from bauxite mining to recycling, is well-established. It contributes over a million jobs and 40 billion Euros in annual turnover to the European economy. It plays a key enabling role, serving 6 out of the EU’s 14 strategic ecosystems. In total, it is made up of over 600 plants. While smelters and rolling mills are often owned by multinationals, the majority of the plants involved in extrusion and recycling are small to medium-sized enterprises (SMEs). All serve as important actors within local communities. Not shown on this map, but equally important to the aluminium value chain, are further downstream plants, including building systems houses, aluminium casting manufacturers and foil-manufacturing plants.

Alumina
Extrusion
Primary
Recycling
Rolling

Key Publications

01
Introduction
03
Driving change