Aluminum - Procurement Best Practices & Sourcing Strategies

Procurement Market Intelligence Report

Aluminum – Procurement Best Practices & Sourcing Strategies

Aluminum Market – Executive Summary, Market Analysis, Procurement Best Practices, Market Monitoring Insights, Tariff and Trade Analysis, Supplier Analysis, Purchasing Process: RFP/RFI Builder, Sustainability Initiatives & Best Practices

1. Executive Summary
1.1. Category Landscape
1.2. Regional Market Outlook
1.3. Supply Market Outlook
1.4. Demand Market Outlook
1.5. ELINT’s Recommendations for an Ideal Category Strategy
1.6. Category Opportunities & Risks
1.7. Negotiation Leverage
1.8. Talking Points
2. Market Analysis
2.1. Global Market Overview: Production and Consumption
2.2. End-uses
2.3. Regional Break-up
2.4. Regional Market Outlook
2.5. Porter’s Five Forces Analysis
3. Procurement Best Practices
3.1. Procurement Strategies
3.2. Procurement Practices
3.3. Sourcing Contracts
3.4. Contract and Payment Terms
4. Market Monitoring Insights
4.1. Aluminum Price Trend and Forecast
4.2. Aluminum: Global (LME) Price Outlook
4.3. Aluminum Price Drivers
4.4. Value Chain – Aluminum Production
4.5. Raw Material Price Forecast
4.6. Cost Analysis and Expected Savings
5. Tariff and Trade Analysis
5.1. Aluminum Market Update
6. Supplier Analysis
6.1. Global Supplier List and Capabilities
6.2. Regional Supplier List and Capabilities
6.3. Key Global Supplier Profiles
7. Purchasing Process: RFP/RFI Builder
7.1. RFP Builder
8. Sustainability Initiatives & Best Practices
8.1. Sustainability Initiatives
8.2. Sustainability Best Practices: Case Studies

What is the current state of the global aluminum market?


The primary aluminum industry is expanding rapidly, with production reaching 68 million metric tons in 2022, an increase of 1% over the previous year.


What factors contribute to the positive outlook of the aluminum market?


One major factor is the broad application of aluminum in building and construction. The global surge in the construction industry drives the demand for aluminum, particularly in countries such as China that are making massive investments in construction.


What industries are contributing to the growth of the aluminum market?


Aluminum finds wide application in the automotive market and is observing an expanding industry. It directly enhances fuel efficiency and environmental protection by helping reduce emissions. In addition, the construction industry sees the benefit of aluminum’s versatility and durability, while the aerospace sector uses aluminum for its strength-to-weight ratio.


Who are the leading players in the aluminum market?


The competition is heated up in the aluminum industry by China Aluminum Corporation Limited, China Hongqiao Group Co. Ltd, Xinfa Group Co., RUSAL, Vedanta Aluminum, Rio Tinto, Aluminia, and Britain’s Arconic, as well as Emirates Global Aluminum and Century Aluminum.


Global Aluminum Market Size


Recent studies conducted by ELINT Market Research show clear signs of solid growth in the aluminum market. The global data about the primary aluminum segment showed a high strength and growth of nearly 70 million metric tons in 2022. It represents a 1% increase compared to the prior year, indicating that the industry is strong even with uncertain economics. The global primary aluminum production also saw an appreciable increase, amounting to 68 MMT in 2022. Furthermore, it shows the sector’s continued expansion potential, constituting a 0.7% increase in numbers published last year.


These persuasive figures point to aluminum as one of the leading contributors to world industry. Given the increased consumption and production, the sector seems promising to grow and become stable due to its strength and resistance to adverse effects. With the world getting into industrial development, the market has become one of the vital pillars of industrial growth.


Aluminum Market Definition


The aluminum industry is a community that captures all the activities concerning the application of this multipurpose metal in different sectors. The world’s economy depends on the production, trade, and use of aluminum metal. Aluminum is light, strong, and does not rust; for these reasons, it is usable in aerospace, motor cars, buildings, packing, and electric use.


Aluminum Market Drivers


With several contributing factors, the market has become one of the important ones in the global industrial world.


Increasing Demand in the Automotive Industry: The growing demand for aluminum results from increased use in the automotive sector, where lightweight materials enhance fuel efficiency and reduce emissions. Given its high strength-to-weight ratio, this property makes it suitable for building light vehicles.


Rising Construction Activities: The demand for robust and resistant materials from the construction sector has further driven the use of aluminum in building and construction. Its flexibility and strength in windows, door frames, and structural members make it a popular product.


Recyclability and Sustainability: The move towards sustainability and environmental consciousness has brought aluminum into the spotlight as a central player. It is easily recyclable and has a low carbon footprint. Therefore, it is a popular material often associated with Eco-initiatives.


Aluminum Market Challenges


Though the market is witnessing a growth outlook, challenges still must be addressed for sustainable growth.


Price Volatility: The global aluminum market suffers from changes in price arising from geopolitics, policy trade, and energy costs. This level of volatility, however, presents significant difficulties for the players’ strategic planning and pricing policy.


Global Supply Chain Disruptions: Disturbances that affect the global supply chain are vulnerable to disturb the market, raw materials’ provision, production, and distribution. Geopolitics may disrupt the smooth running of various activities, such as mining and processing aluminum.


Aluminum Market Opportunities


The market comes with many challenges, though, in that there are numerous prospects for visionary organizations to grab hold of.


Technological Advancements in Production: Aluminum production technologies continually evolve through R&D to improve reliability, reduce energy usage, and make production cost-effective.


Innovation in Recycling Processes: Advanced recycling technologies create new opportunities for implementing green practices on the market. Recycling innovations help preserve resources and responsibly steward the environment.


Aluminum Market Trends


Understanding existing trends and adaptability to them is needed to stay ahead of the competition.


Focus on Circular Economy: There is a paradigm shift in the market towards a circular economy that pushes recycling and minimizes waste. Closed-loop systems have become common in many companies as a way of improving sustainability.


Aluminum Alloys Innovation: Research and advancement on aluminum alloys provide new high-performance materials that suit specific applications. It increases the metal’s flexibility and widens its usage scope.


Digital Transformation: Integrating these technologies, such as the IoT and Artificial intelligence in the market, makes production more efficient. Smart manufacturing and decision-making based on data will soon be integral parts of industry processes.


Aluminum Market Segmentation


In this context, understanding the wide range of aluminum uses is crucial for successful market segmentation.


End-Use Industries: The study further divides the market into automotive, aerospace, construction, packaging, and electrical.


Product Types: The research divides the market into the report’s primary and recycled aluminum markets.


Geographical Regions: The report segments the market into Latin America, North America, Europe, Asia-Pacific, and the Middle East & Africa, based on regional outlook.


Supply Contract Tenure and Pricing Formula


The market functions with short-term supply contracts, usually up to three years. They have demand-based pricing formulas and an adjustment clause that changes based on the raw materials prices. It offers stability in the way of changes depending on the cost of raw materials; it helps formulate equitable and flexible pricing mechanisms.


Negotiation Power


The bargaining power between buyers and suppliers is equal in the aluminum market. It determines that both buyer and supplier power are medium, indicating a relatively balanced or competitive market condition. Such an equilibrium creates a conducive environment for transparent transactions and healthy relations between the parties.


Major End Users


Transport accounts for 26%, while construction accounts for 24% of the total sales in the market. Of these 11%, electrical applications constitute 11%, while packaging and machinery constitute 16% and 11%, respectively. The wide range of end users emphasizes that aluminum is usable in different sectors.


Highest Production and Consumption Countries


As critical players, China, Russia, India, Canada, and the UAE dominate aluminum. These countries are influential in terms of the world’s aluminum environment. The largest consuming regions are China, the US, Germany, Japan, and the UAE due to its neediness in the economic activities within these countries.


Highest Market Maturity Regions


Maturation levels vary among markets in different regions. The Asia Pacific and the Americas are assessed as the highest maturity regions for the market, implying a matured and secure market situation. In this case, maturity gives rise to innovation, sustainability, and strategic planning in the aluminum industry.


Cost Components


Stakeholders need to understand the cost structure of the aluminum market. Up to 80% of the total costs, which include raw materials, represent 45–55%, underscoring the importance of maintaining a steady and low input supply chain. Moreover, electricity makes up 33% of the expenditure, which illustrates the heavy nature of aluminum production processes.


Aluminum Market Supplier List


Many suppliers are catering to the needs of the vibrant industry. China Aluminum Corporation Limited, China Hongqiao Group Co. Ltd, and Xinfa Group Co., RUSAL, Vendant Aluminum, Rio Tinto, Aluminia, Arconic, Century Aluminum, Hydro, Emirates Global Aluminum, Novel are leading players. This plurality of supplier landscape creates a competitive environment.

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