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I. Executive summary

World aluminium usage including primary and recycled metal increased by about 1.9% in 2022 and
stood at 95.3 million tonnes. The robust global aluminium market has temporarily been slowed
down on account of the recent geopolitical and consequent economic crisis. The ongoing war
will continue to affect the European demand for the metal. High inflation and continuing threat of
recession will negatively impact the global aluminium demand at least during the first half of 2023.
With China lifting zero-covid restrictions, the demand for aluminium in the country is expected to
increase, despite short-term hiccups. While China’s mid-term domestic demand remains muted on
slowing economic growth, we believe that the world’s second largest economy is unlikely to suffer
a dent in aluminium demand as the long-term outlook remains moderately optimistic. Aluminium
demand in emerging nations like India with good economic growth prospects is expected to increase
during 2023.

Figure 1.1: World aluminium consumption, 2021 to 2023 (million tonnes)

100
95.3 96.9
93.5
80
Aluminium usage
(mn tonnes)

60

40

20

0
2021 2022 (p) 2023 (f)
Note: Aluminium usage includes primary & recycled metal; p - preliminary estimate;
f - forecast
Source: AlCircle research estimate

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On the supply side, decarbonising aluminium will be the industry’s topmost priority in the years to
come. This is expected to intensify as regions impose carbon tariffs on carbon intensive products.
In December 2022, the European Union agreed on a preliminary deal for an EU Carbon Border
Adjustment Mechanism (CBAM) on imported goods such as iron and steel, cement, aluminium,
fertilisers, electricity, and hydrogen and is applicable from October 2023. This facilitates imposition
of carbon tariff on carbon intensive products imported by the EU. While much of the investment
in decarbonisation is likely to focus on improvements in the energy grid to decarbonise electricity
supply, additional investment is likely to be made in reducing carbon emissions in aluminium
production. Usage of recycled aluminium is also likely to witness good growth in the coming years
as this also facilitates decarbonising the industry value chain.

Primary aluminium production increased by about 1.7% and stood at 68.2 million tonnes in 2022.
The decline in primary production rate is mainly attributed to curtailments in European primary
capacities as a result of soaring energy costs. Globally, the declining primary aluminium supply and
decelerating demand resulted in steady decline in stock level. In 2023, the European curtailments
are likely to be compensated by limited capacity additions and production increases in China and
elsewhere in the world. Recycled metal usage increased by about 4.2% during 2022 and stood at
about 27 million tonnes.

Figure 1.2: Trend in primary aluminium production, 2012 to 2022 (million tonnes)

80.0

70.0 68.2
64.2 65.3
Primary Production

59.9
(Mn. tonnes)

60.0 54.6
49.2
50.0

40.0

30.0

20.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: International Aluminium Institute, AlCircle research estimate (2022)

The packaging sector continued to grow through 2022, as the demand for beverage cans and
packaging foil increased. Packaging, electrical and industrial sectors are likely to witness moderate
growth in 2023. The demand from transportation and building & construction sectors is likely to
prevail under pressure.

The demand for FRP (incl. foil) is expected to grow by about 2.3% in 2023, driven by the usage in
packaging sectors. Extrusions demand is forecast to grow by about 1.3% during the year.

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