The global aluminium market is likely to experience a number of deficits over the coming years, as solid demand growth, driven by the construction and automotive sectors, outpaces production growth, says Fitch Solutions Macro Research.

Fitch expects the global primary aluminium market to remain largely undersupplied until 2026, as modest demand growth outpaces production growth. From 2026 onwards, it expects the market to shift into oversupply.

The global aluminium demand outlook is set to benefit from solid construction industry growth in key countries and the metals increase use in automotives as a lightweight substitute for steel.

Fitch forecasts that the global aluminium market will witness deficits or be almost in balance from 2019 to 2023, with the aluminium stock-to-use ratio to decline steadily from 10.5% to 4.7% over the same period.

Global aluminium production is set to continue to rise from the coming years as higher prices incentivise producers to continue increasing output.

Fitch forecasts the global production growth rate to average 2.7% year-on-year from 2019 to 2028, representing a slight slowdown, compared with the average growth rate of 5% over the previous ten-year period.

In the shorter term, Fitch expects output to accelerate by 3.4% this year, owing to its expectation of a recovery in output, following supply disruptions hindering output last year, ranging from stoppages at Norsk Hydro’s Alunorte refinery, in Brazil, to US tariff-related disruptions at Alcoa.

Disruptions in Canada and Brazil have, as of July, been resolved and, thus, Fitch expects output growth to pick up considerably in the second half of this year.

China’s aluminium production growth is expected to slow down over the coming years, as government’s push for consolidation and stricter environmental regulations takes higher-cost and less-efficient capacity off line.

However, there will not be an outright decline in absolute output over the coming years, and Fitch expects the country’s aluminium output to edge higher, from 34.1-million tonnes this year to 40.8-million tonnes by 2028, averaging 2.1% yearly growth, compared with an average yearly growth rate of 11.7% over the previous ten-year period.

Nonetheless, China will remain the driving force behind global aluminium production, accounting for over half of total output over the coming years.

In terms of demand, the global aluminium picture will be stable over the coming years, driven by steady demand growth in Asia and the growing application of aluminium in industries such as automotive and aerospace, says Fitch.

However, global demand growth will gradually slow, compared with previous years, as Chinese economic growth and, therefore, demand for metals tick lower.

Fitch forecasts aluminium consumption to increase from 62.9-million tonnes this year to 78.6-million tonnes by 2028, averaging 2.8% yearly growth.

India is set to be the standout growth market for aluminium consumption in the coming years.