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Aluminum Prices in South Asia will Rise Further as Electricity Prices Soar

The prices will increase in South Asian countries because of the soaring prices and supply fears of electricity. The cost valuation of the metal in March 2022 declined by 45 percent to around 2,400 dollars per tonne because of the lockdown situation in china.

Worries concerning sluggish economic growth and production have become a priority as the rising aggressive behavior of central banks are likely to rule in the soaring inflation thus undermining the demand for manufacturing and industrialised metals.

The aluminum prices tend to rise in medium terms and are likely to get bottomed up and are majorly supported by two main factors uptick demands and smelter capacity additions.

As per market experts, the next five years for the limited capacity additions will be crucial for picking up the prices of aluminum. The demand for aluminum will expand for renewable energy grids, solar panels, and electric vehicles. The primary production of aluminum in India exports about 58-62 percent.

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Over the past decade, domestic smelters expanded extensively adding up a capacity of 2.4 MT and attained a growth rate of 9 percent till FY22. However, during account for the expansion of capacity by cable conductors and the power sector, the domestic demand showed up a slower growth rate of about 4 percent.

The inflow in LME’s warehouse in Asia of the fresh inventories further hyped the prices however, the old Asian stocks remained low historically. The output, on the supply side, was diminished in April 2022, and on the other hand, china recorded higher production records.

The production of aluminum rose in China by 5.6 percent, with a high monthly record of 3.43 million tonnes in July 2022.

In addition, during the second quarter of 2022, due to low demand, the prices of aluminum ingots declined. The terminal injuries remained low, in the month of May. The inflation in the prices on a global scale will further lead to reduced demand for industrial metals.

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As per procurement resources, due to rising electricity costs and supply concerns, prices will rise in South Asian nations. With the lockdown scenario in China, the cost valuation of the metal fell by 45 percent to about 2,400 dollars per tonne in March 2022.

The next five years will be essential for raising aluminum pricing due to the limited capacity expansions. The domestic economy had a slower growth rate of roughly 4% when taking into consideration the capacity increase by cable conductors and the electricity industry. Around 58–62 percent of India's primary aluminum production was exported, and domestic smelters significantly increased, doubling their capacity to 2.4 MT.

Fresh inventory influxes into LME's Asian warehouses further inflated prices, although historical Asian stock levels remained low; China's production of aluminum increased by 5.6 percent. Due to a drop in demand in the second quarter of 2022, aluminum ingot prices fell. In May, the number of fatal injuries remained low.


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