Recently, I had the pleasure of interviewing Hydro, a green aluminum producer with multiple plants and locations around the globe. Mike Stier, Hydro’s Vice President of Finance, and Duncan Pitchford, President of Hydro Aluminum Metals in the U.S. (whom I’ve had the pleasure of interviewing before), sat down to discuss Hydro’s views on aluminum performance in 2024. During this interview, both provided me with comprehensive insight into aluminum prices, the traditional aluminum industry, and the green aluminum industry.
Interview: Hydro Aluminum Metals
Q: How do you anticipate the U.S. aluminum market and aluminum prices will perform in 2024?
A: ‘We’re seeing things stabilize at a lower level than hoped. Originally, there was optimism and some level of recovery in the aluminum sector. However, now there’s talk of a possible recession.”
“Our view is likely more so relatively flat throughout 2024, near levels where we are operating at within Q1 right now. We’re hoping to stave off any recession and keep things stable, but not seeing anything imminent in the second half which would suggest an upside. So, anything with Fed drops is a delayed effect. We’re not expecting too much change.”
Q: How do you see the European aluminum market performing in 2024?
A: “I think on the European side the story is very similar. All indicators suggest a flat market. Maybe prices have moved a bit more recently because of supply issues, but on the demand side, there doesn’t seem to be a lot of change. Later in the year, conditions can change. Construction activity is weaker than it usually is, but other sectors are doing okay, like the automotive sector. So performance is sector-specific.”
Get a competitive edge in sideways aluminum markets. Learn game-changing metal industry insights by opting into MetalMiner’s weekly newsletter.
Aluminum Prices: Geopolitical Drivers
Q: Can you please speak to some of the geopolitical unrest that is currently impacting the aluminum market? Do you anticipate these factors will continue to be a problem in 2024?
A: “Obviously, it’s difficult for us to comment on aluminum prices. But if you look at how the prices have moved in the market recently, ingot premium has been impacted recently thanks to the Red Sea problems. Shipping rates are increasing, and this is causing a lot of problems with logistics costs. In regards to the LME, again, we can’t speculate too much on their prices, but there are challenges currently with the amount of Russian metal which is on warrant. This could potentially impact pricing.”
Q: Currently, China’s property sector is struggling a lot, and China is one of the top global consumers of aluminum globally. If things were to worsen with the country’s property sector, do you see this massively impacting global aluminum prices?
A: “Correct, China is the world’s largest producer and consumer of aluminum, so changes in the Chinese market impact will impact the global market and aluminum prices. If any other substantial changes happen within China’s property sector, that would impact demand and could potentially impact prices. But where that stands today and which direction that is going in is difficult for us to say.”
Production Outlook
Q: Has the aluminum industry witnessed any loss of product output due to switching from carbon-heavy production to more green production?
A: “I don’t know if you can say if there has been a loss in production in the transition. In fact, I’d say production has been added. Hydro has added additional aluminum recycling to numerous plants. We have ongoing investments in recycling production in Pennsylvania as well.”
Q: The global aluminum market is likely to experience a surplus in 2024, which could impact aluminum demand and aluminum prices. I know you guys produce green aluminum, so you have an advantage over carbon-heavy aluminum producers. However, is Hydro worried about this oncoming potential surplus?
A: “For us, our supply and demand market conditions are “active,” if you will. Just because there is additional supply in the market doesn’t mean that there will be a drop in demand. Those two don’t necessarily function in that manner.”
Opt into to MetalMiner’s free Monthly Metals Index report and leverage it as a valuable resource for tracking aluminum price trends.
Outlook for Aluminum in the EV Market
A: In your opinion, can the EV market add (and keep adding) sufficient aluminum demand to the overall market to help even out this predicted surplus?
Q: “I think the long-term view of EV-driven demand looks very promising due to the metal’s recyclability and light weight. So long-term the application expansion is very good. Near-term, it is a bit of a challenge. We’ve seen a broader market and acceptance, not moving as fast as the market originally projected it would with consumer acceptance. So, not as strong in the near-term, but very promising in the long-term for us. We have several different operations which support EV in North America, and we’re continuing to invest.”
A: Are there any other additional comments the two of you would like to add?
Q: “Electrical vehicles are a growing area and an area where aluminum applications make the most sense, again, because of recyclability and light weight. There’s properties you can achieve with aluminum extrusion, like combining crash-performance and the ease of shaping. It makes aluminum uniquely positioned for EVs. On top of that, you have the end customer being interested in knowing their materials in their EVs are responsibly produced and reduce environmental impact.”
Are you under pressure to generate aluminum cost savings? Make sure you are following these 5 best practices.
