Introduction
The global aluminium market has witnessed a significant price correction since its peak in April 2022. This blog explores the key factors driving this downward trend, with a focus on how they impact the aluminium price trend in India.
Key Driving Factors
- Low demands from China and Europe
Major factor is infrastructure slowdown in China and Europe. Aluminium plays a crucial role in various infrastructure sectors like construction and transportation. A slowdown in the Chinese housing market and infrastructure projects, coupled with similar trends in Europe, has significantly reduced global demand for aluminium. This lack of demand puts downward pressure on prices.
- Energy Constraints
China is the world’s largest aluminium producer. However, in 2022, the country faced energy constraints due to factors like rising coal prices and a focus on emission reduction policies. This led to production cut in the aluminium sector, impacting global supply. However, with production resuming to some extent, the existing stockpiles combined with reduced demand are driving down prices.
- Supplier Chain Repaired
War in Ukraine Caused Temporary Disruptions. The war in Ukraine initially disrupted aluminium production and transportation across the globe. However, over time, supply chains have shown signs of recovery, with production resuming in many regions. This improved supply, coupled with stagnant or declining demand, has resulted in a surplus of aluminium in the market, leading to a price drop.
Aluminium Price Trend in India
While these global factors significantly influence the aluminium price trend in India, there can be additional nuances specific to the Indian market. Here are some aspects to consider:
- Import Dependence: India relies on imports to meet a significant portion of its aluminium demand. Global price fluctuations directly impact the landed cost of aluminium in India.
- Rupee Exchange Rate: The value of the Indian Rupee (INR) relative to the US Dollar (USD) can also influence the domestic aluminium price. A stronger INR can lead to slightly lower import costs for aluminium.
- Domestic Production: While India has domestic aluminium production capabilities, any changes in domestic production levels can also affect the overall supply and price dynamics within the country.
Aluminium Price Trend in 2024: An Overview
Some experts are saying that the prices will remain stable on the other hand some are saying that prices can show downward trend. There is less demand in the manufacturing sectors affects the prices of aluminium. Also in the world market, the fluctuations in demand and supply are also affecting the aluminium prices. Disruptions in manufacturing or trade war are also the things that affects the prices of the aluminium. Aluminium is energy consuming product. It consumes a great amount of energy in production. Hence leading to increased aluminium prices.
Also, the Indian currency is very sensitive as compared to the other currencies in the world. Weak Rupee can also lead to the increased aluminium prices in 2024. Government regulations like import duty and export restrictions can also affect the aluminium prices in 2024.
Conclusion
By understanding the global and domestic factors influencing the aluminium price trend in India, businesses involved in the aluminium industry can make informed decisions about procurement, pricing strategies, and inventory management. Utilizing reliable resources for tracking aluminium price trends and market analysis can be crucial for navigating this dynamic market.
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