The Annual ALFED Business Briefing took place on Thursday, 10th November 2022. Attending the briefing were members of the Aluminium Federation (ALFED) and key players in the aluminium industry.
The UK aluminium industry, as constantly reiterated, is facing a number of challenges. With “inflation, geopolitics, energy, supply and demand, etc” all colliding in 2022, as noted by Mike Dines, ALFED President, ALFED, the industry has and is yet to face the largest challenge of the past three decades.
The briefing hosted a number of speakers, including Malindi Myers, Deputy Agent, Monetary Analysis, Bank of England, who provided the audience with an economic update. Speaking on the Economic and Aluminium Market Outlook overview were CRU Group representatives, Alex Tuckett, Head of Economics and Paul Williams, Head of Aluminium. Alex Tuckett summarised that there are “three large threats to the industry: The energy crisis, inflation and Chinas domestic issues.” With these, the industry is faced with external factors which are out of our control. Not only this, but these issues are unpredictable, meaning preparation for events is next to impossible, as Paul Williams said, “it is a fool’s game to try and forecast, so just run through the ideas.” Mr Tuckett went on to note that we may yet face the greatest period of hardship; as winter 2022 approaches, we have fuel in storage, perhaps it is winter 2023 we should be watching out for, when our storage is no longer full.
The topic of discussion quickly moved on to the case of Russian metal. Sanctions on Russian metal have not been implemented by governing bodies, nor by the LME. However, companies have self-sanctioned themselves from Russian metals. This has meant companies outsource their aluminium from countries with relaxed sustainability standards; so is there a threat to the sustainable quality of aluminium in the long term? The production of primary aluminium in Europe has reduced by 46%, said Mr Williams, this being the result of the energy crisis, further insinuating that there is a risk of deindustrialisation in Europe.
On top of this: How low can the price of aluminium go?
Calling out from the audience, a member of the aluminium industry asked speakers to deliver something positive and hopeful amongst the repetitive doom and gloom.
It became apparent that those who have been in the industry for longer than 30 years believed that the fluctuations of a market and despite global challenges, the progression of a good thing cannot be stopped. This is the attitude towards aluminium for many of those who have spent more time in the industry.
Turning the conversation 180 degrees, Professor Andrew Perchard, University of Otago, spoke on the history of UK aluminium from 1962-2022, in celebration of ALFED’s 60th Anniversary. Reminiscing on past difficulties and challenges reminded the industry of what we have achieved. The uncanny repetition of events: 1962 was the year of the Cuban missile crisis where the Soviet Union threatened war, the 1962 ‘flash crash’ of the stock market where the S&P 500 experienced a 22.5% decline…
Did someone say history doesn’t repeat itself?
The key takeaway, however, is that aluminium is striving in 2022. Sixty years on from ALFED’S introduction and the material is considered the metal of the future. It must be noted that despite any initial declines in the demand for the material, it is predicted that this demand will increase dramatical as uses for aluminium expand. Already the automotive industry is researching the multitude of methods for the implementation of aluminium with its circular nature, and this is one of many industries which desire aluminium.
Speaking further on the special characteristics of aluminium was Nadine Bloxsome, Membership and Sustainability Manager, ALFED. Sustainability. The metal of the future. An answer to technologies biggest questions? The applications of aluminium are limitless; packaging, computers, automotives, aerospace, phones, etc. With this demand, there are still sustainability challenges. Mrs Bloxsome went onto discuss how a membership at the ALFED association can assist the industry with the sustainability challenges it faces.
Speaking next was LME Head of Corporate Sales, Christian Mildner. Discussing the role of the LME in ensuring the standard of aluminium is maintained, he spoke of the LME Passport. One necessary feature of aluminium is the transparency of the material. With transparency comes the natural attention to sustainable aluminium. Consumers can trace, reliably, where aluminium comes from and enables users to actively choose sustainable, responsible products. Mr Mildner also issued a comment on the LMEs position on Russia stating they will enact a response based upon: “the status quo and implementing thresholds to manage the quantity of Russian aluminium.”
From the audience, the question arose as to what responsible aluminium is defined as. With “aiding conflict” being on the list of factors taken into consideration when measuring responsible aluminium, Russian aluminium comes into questioning. Is Russian aluminium responsible aluminium?
The penultimate presentation, hosted by Pernelle Nunez, Deputy Secretary General and Director of Sustainability, International Aluminium Institute, spoke on ‘A material of choice: Demonstrating aluminium’s sustainability credentials’. Reiterating the importance of sustainability and transparency when discussing aluminium, the IAI, she says, “has been an organisation who has researched and monitored the facts on aluminium for the industry.” Following and analysing trends in the industry, the IAI provides knowledge on the industry beyond history. Referring to the current challenges the industry is facing as “short term blips”, Ms Nunez maintained a positive outlook for 2030, where the automotive, construction and packaging industries are expected to increase their demand for the metal, with “demand increasing by over 7 million tons predicted for 2040… and a need for 180 million tonnes in 2050.”
Closing the briefing was Mairi Spowage, Director of the Fraser of Allander Institute. Speaking on the economic contribution in the wider aluminium industry, the company has researched and gathered information on the importance on the industry on the communities surrounding it. In their second publication on the reflection of aluminium on the UK economy, they repot that there are around 39,000 people in the UK who are employed in the wider aluminium industry, with a heavy concentration located in the west midlands. So, the importance of aluminium transcends its nature, sustainability, economics and moves to social benefits too.
Aluminium has presented itself to be a resilient material designed for the future, despite the current challenges, the majority of the industry hold the metal at the top of innovation and successes. 2023 will be a year to observe, will it be a year for aluminium?