21 November 2023 – Aluminum demand in China continues to rise steadily. Green technologies, energy and electric driving are the main drivers of the recovery in aluminum demand. But can demand even be met when the first energy shortages are already here? And analysts at Goldman Sachs expect commodity prices to rise substantially again from 2024.
China’s aluminum sector: rising demand meets energy shortage
In October, aluminum production in China continued to increase and jumped by 6.7% compared to the previous year. Overall, Chinese production of the light weight metal increased by more than 3.5% from January to October despite all the challenges. This boom should once again underline China’s relentless pursuit of economic recovery.
However, due to energy shortages, regions such as Yunnan are now cutting back on their production, which could reduce the country’s overall production rate by up to 3% in Yunnan alone. This strategic move is likely to lead to a shortage on the domestic market, which could also have an impact on global supply chains.
Green revolution boosts demand for aluminum
China’s green crusade is driving up demand for green metals. The country’s enthusiasm for electric vehicles (EVs) and renewable energy is gobbling up huge quantities of the metal. From EV components to solar infrastructure, China’s appetite for aluminum is insatiable and should continue to underpin the country’s economic recovery.
Goldman Sachs is optimistic about the metals and commodities market
Goldman Sachs is optimistic about the metals and commodities market and forecasts a 21% jump in returns next year. The optimistic forecast is based on the expectation of higher spot prices, which are supported by a loose monetary policy and diminishing recession worries.
The current analysis focuses on industrial metals, for which an increase in yields of 17.8% is forecast, while the energy sector is set to increase by 31%.
The analysts also emphasize the strategic value of commodities as a hedge against global supply uncertainties. A bright future is predicted for copper and aluminum, as dwindling stocks are likely to drive prices up from 2024.
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