Aluminum Manufacturing

The Aluminum Manufacturing industry has experienced considerable uncertainty in the five years leading up to 2020, owing primarily to increases in aluminum prices, which represent global supply and demand.

Although higher costs boost the expense of manufacturing purchased aluminum, operators normally pass on cost increases to consumers, resulting in increased industry sales. Aluminum prices have been especially volatile over the last five years, coinciding with more sluggish demand from major markets.

As a result, revenue has fallen an annualized 3.7 percent to $34.2 billion over the five years to 2020, including a 15.0 percent drop in 2020 alone, as problems related to the COVID-19 (coronavirus) pandemic have triggered major market slowdowns and compounded business results. Furthermore, profit in the sector is projected to slip in 2020.

Companies in the Aluminum Manufacturing sector process aluminum-bearing bauxite into alumina and smelt alumina to manufacture aluminum. Secondary aluminum processing is a less energy-intensive process in which aluminum is recycled from scrap metal.

In addition, the industry involves a diverse range of both vertically integrated and standalone manufacturers that refine unwrought aluminum, usually purchased from upstream manufacturers but also manufactured locally, into intermediate and value-added products such as plate, board, foil, and extrusions for downstream manufacturing and construction markets.

Aluminum is a lightweight, ductile, corrosion-resistant, highly conductive, and infinitely recyclable metal that can be used in a variety of applications.

As a result, aluminum products are used as supplies in structural components for automobiles and aircraft, electrical equipment and parts, packaging materials, nonresidential construction, and a variety of other applications.

Over the next five years, the Aluminum Manufacturing sector will most likely benefit from rising aluminum prices and increased demand from key industrial markets. Import penetration, on the other hand, will almost certainly prove to be a problem for operators.

Nonetheless, expected increases in demand from the automobile and construction industries would undoubtedly continue to boost industry efficiency. Expected changes in product and pricing mix, along with ongoing attempts to reduce manufacturing costs, will also undoubtedly contribute to profit retention over the next five years.

Overall, Research anticipates an annualized 2.5 percent increase in market sales to $38.8 billion over the next five years. However, owing to the impact of the COVID-19 (coronavirus) pandemic, this rise will start from a low base; additionally, research forecasts are focused on existing laws and circumstances, which could begin to change in light of increasing coronavirus case numbers in fall 2020, as well as the outcome of the 2020 US presidential election.

This industry is concerned with refining bauxite, which is a source of aluminum, into alumina, smelting alumina to make aluminum, and manufacturing a variety of aluminum products such as castings, plates, sheets, foils, and extrusions. Aside from enterprises that recycle aluminum from scrap, the market also includes businesses that collect aluminum from the waste stream.

The Aluminum Manufacturing industry is approaching the mature stage of its life cycle. During the ten-year period between 2018 and 2025, industry IVA, or its contribution to the total economy, is anticipated to decrease at an annualized rate of 0.3%.

Projected GDP will expand on an annualized basis at an average of 1.9 percent over the same 10-year period. The forecast of IVA performance is expected to fall short of GDP growth over the duration of the projection, since this sector saw declining demand throughout 2015 and 2016 owing to cyclical demand factors and dramatic dips in global aluminum prices, as well as long-term decreases starting in 2019 and 2020.

Sector consolidation is an indication of the maturity of the industry. Companies as a percentage of the entire industry reduced from their 2000 peak, but their number decreased to its lowest level during the time period from 2010 to 2025. What is of more importance is that revenue per firm is expected to climb, showing that bigger aluminum producers are increasing their operations and market share.

Another contributing factor is that the industry’s goods, technology, and markets are all mature. With regards to changes in products or markets, we see little indication that they will materialize. At the same time, technical progress in the sector is concentrated on driving down prices and increasing the quality of already offered goods and services. The studies found all of these stabilizing elements, which together imply that the industry is likely at the mature phase of its life cycle.

Additionally, a notable development has been increased aluminum penetration within the automotive market as a result of rising aluminum content in lightweight vehicles, due to an increase in vehicle weight. Furthermore, increasing demand for sheet from this market is expected to result in the greatest opportunity for industry growth over the next five years.