Aluminum Market Is To Be Watched In Terms Of Lucrative Outcomes

Posted on: Jan-2019 | Manufacturing & Construction

One of the most neglected economic dynamics in the last five years is the recession in the Chinese processing sector that lasted from December 2014 to June 2016. Today, China is on the verge of a new production recession following Caixin's PMI contractions in December 2018.

Aluminum has pushed back other markets, comprising oil prices, other industrial products, and even stocks. In fact, aluminum dominated the markets in 2018 in a dynamic, we noticed during the fall at the end of 2014 until mid-2016 and the increase caused by the recovery from mid-2016 to the beginning of 2018.

Supply chain professionals and CEOs are particularly frustrated by highly volatile business dynamics and businesses need stability to plan their production and implement their strategies. As without stability, it is impossible to execute the forethought plans. This poses a threat to US corporate investment in an environment with higher interest rates in 2019, although the Fed is suspended and even if the trade war is about to end soon. The bright spot for potential growth for 2019 and 2020 is US consumption, which is responsible for about two-thirds of US gross domestic product.

One of the reasons why aluminum is an important indicator is that China uses most of the aluminum in the world. Its contribution is at large, somewhere around 54%. This means that aluminum is a more reliable indicator of China's economic health than any other measure. And reliable indicators for Chinese growth are rare owing to short supply. But aluminum consumption in China is not the only reason the product is dominating the market. Aluminum consumption is heavily shared among high-tech industries such as equipment with 9%, construction with 25%, and transportation with 27%.

However the political conflicts amid two major economies would be somehow responsible for the changing market figures in diverse sectors.