Steel Products Prices North America

CRU: Expectations and Risks to Aluminum in 2022

Written by Greg Wittbecker

By Greg Wittbecker, Advisor, CRU Group

It’s that time of year when we start looking ahead as we put the current year in our “rear view mirror.” Here are some of the things that I circulated to the CRU Aluminum Analysis team for consideration among our “top calls for 2022.” These are not officially “blessed,” but give you some of my perspective as we head into the holidays:

CRU• The Democrats lose their mandate to govern, losing control of both the Senate and the House in mid-term elections, making the Biden administration’s remaining two years very difficult. Incumbent governing parties always seem to struggle in the mid-terms, and 2022 probably won’t be an exception. Inflation and frustration with COVID are among a list of contentious issues that may drive voters to give the Republicans the edge.

• Russia sanctions based on an invasion of Ukraine put the aluminum market into extreme supply stress. I spoke of this last week. Since then, the Kremlin has put out some unrealistic demands, asking for Ukraine and other ex-Soviet nations to be barred from NATO. It appears to be a pretext justifying intrusion into Ukraine. Xi has backed Putin’s concern over Russian security. This looks like it is going to get very ugly. The aluminum market is not positioned to handle the loss of Russia’s 3 million tons/year of exports. This could cause major upward price action on both LME and regional premiums.

• U.S. demand for durable goods slows in the second half of 2022 as consumers rotate spending toward more “experiences” and less hard goods in the form of autos, RVs, homes/housing. Rising prices and interest rates may cause consumers to postpone big ticket purchases.

• U.S.-China relations worsen over human rights and Taiwan. The diplomatic boycott of the Olympics may be only the start of more actions by the Biden administration. We might see more punitive duties on Chinese goods entering the U.S. This feeds inflation as those “cheap” Chinese consumer goods dry up and alternative supplies are more expensive.

• The EU accelerates the imposition of antidumping duties on Chinese extrusions in response to China’s human rights violations. This continues to concentrate more demand inside Europe, pushing prices up and straining domestic aluminum capacity.

• The Chinese housing market weakens sharply as inflation and lack of income growth makes affordability difficult. Beijing steps in to increase credit liquidity and loosens restrictions on investment ownership of property to shore up demand.

• Russia and China agree to a long-term aluminum supply agreement in which UC Rusal agrees to supply low-carbon primary metal and China begins to decommission smelters below 400 ka amperages. These politically like-minded countries will use this to de-risk Western sanctions on Russian exports and accelerate China’s decarbonization efforts.

• China announces a breakthrough of its own inert anode technology for primary smelting. They already have patents out there on this, but now it is a matter of demonstrating commercial scale. China’s track record in primary technology has been impressive; they may very well beat Elysis and Rusal to the finish line on this.

• The EU places an export embargo on some grades of ALU scrap to ensure domestic availability, to limit exports directly or indirectly to China, and to de-risk the possible loss of Russian primary metal.

• New greenfield smelter projects in Colombia and Vietnam find capital to start construction for delivery in 2025-26. Potentially higher LME prices raise investor confidence in returns for primary, LOW CARBON projects.

• European smelter curtailments may increase if power prices remain very high. This becomes especially likely if the Russians were to disrupt natural gas exports to Western Europe in retaliation for Europe backing American sanctions on Russia in the event of a Ukraine invasion.

Clearly, I don’t have a crystal ball on any of these things. But as we close 2021, many of these sure look possible.

Best wishes from the CRU Aluminum and Base Metals Analysis teams. We hope everyone enjoys a  happy and very safe holiday season.  

Greg Wittbecker joined CRU in January 2018 after retiring from Alcoa, where he was Vice President of Industry Analysis and Managing Director of Alcoa Beijing Trading, based in Shanghai, China. His career spans 35 years in the aluminum industry, having also held senior commercial and management roles at Cargill, Wise Metals and Koch Supply and Trading. Greg brings perspective on the entire aluminum supply chain from bauxite to aluminum finished products and will be a regular contributor to SMU going forward. He can be reached at

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