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The prices of aluminium chloride in the Asian market underwent a significant drop after a notable instability during the final months of Q4 2023. The declining demand from the downstream industries, along with the low feedstock prices, had a negative impact on the costs of aluminium chloride throughout the month of December. The year ended with an evident reduction in the spot prices, marking a m-o-m decline of approximately 6.06% in the Indian chemical market during December 2023.

The decline in prices of feedstocks, including hydrogen chloride and aluminium metal, in the major regions of Asia affected the costs of aluminium chloride throughout the period. Moreover, the reduction in the demand from the downstream industries contributed to the negative price trend for aluminium chloride in Asia.

Reduction in Aluminium Chloride Prices Due to Low Costs of Feedstocks in December

Hydrogen inde or hydrochloric acid along with aluminium metal, are the two vital feedstocks utilized in for aluminium chloride production. The two prominent components experienced a major drop in their prices during the final weeks of December 2023 compared to the previous month.

Decline in the Prices of Hydrogen Chloride Amid Low Demand

The reduction in costs of chlorine, a feedstock, coupled with the heavy inventories, pulled the price down during the period. Additionally, the situation of stockpiling amid declining prices of feedstock prompted a reduction in demand from downstream industries. Prices of products that require hydrogen chloride as a feedstock, including polyaluminium chloride (PAC), also went down during the period.

Downturn Noticed in the Chinese Aluminium Metal Market Amid Rising Environmental Concerns

The environmental issues faced in China caused a lot of difficulties in production activities. Regions with major production units, especially Heibei, called for a reduction in production activities due to the emission of high pollution between the months of December 2023 and January 2024. The sudden slowdown in the production of aluminium (Feedstock) led to a tight supply situation in the Asian market.

The low supply of aluminium resulted in light inventories, ultimately contributing to the declining demand in the Asian market. Moreover, the seasonal slow time for aluminium metal faced during the month of December strengthened the negative market sentiments. Overall, the prices of aluminium metal remained low, impacting the aluminium chloride market, as well.

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According to Procurement Resource, the prices of aluminium chloride underwent a notable decline during the final months of Q4 2023, measuring an m-o-m decline of approximately 6.60% in India. The decrease in the prices of the feedstocks, coupled with the low demand observed from the downstream industries, contributed to the contraction. Moreover, low production activities amid environmental concerns faced in China altogether caused a notable drop in the costs of aluminium chloride in Asia.