The aluminium industry around the globe is anticipating an additional recovery in consumption as major global markets indicated revival. The effect on growth as a result of Chinas narrowed credit policy was not noticeable in the early months of FY18 because manufacturing activities supported consumption of aluminium.
Housing, construction, and auto requirement may get affected by narrowing of credit later. Nevertheless, new building projects may support the generation of demand. On the manufacturing side, despite environment-led shutting down and reforms related to supply in China, manufacturing will register a stable growth in CY17, because of restarts of smelters and capacity ramp-ups. Excluding China, global production (ROW) is anticipated to grow by around 2% in FY18.
The global market is expected to be in excess due to the surplus manufacturing in China in FY18. On the other hand, the deficit may grow further in ROW, as utilization is expected to grow during the same time.
Due to a strong base in India, it is likely that user industries demand will rise with the growth in economic activity in FY18. One of the major drivers of demand among user industries will be the power sector. Successful implementation of changes in China will drive LME trend in FY18. Besides these changes, Chinese reforms, exports from China, input cost, global inventory level, and USD exchange rates trends may impact LME price in FY18.