IMPACT IMMINENT

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Like all manufacturers, Metrix Group is not immune to the global supply and demand trends for our key material, Aluminium.

The global effect of COVID-19 on major manufacturing sectors varied significantly. Can stock producers in the US and EU continued to report strong growth in spite of the pandemic while automotive industry experienced near production shutdown.

Around the world, Aluminium producers responded with reduced output in the face of reduced demand.

Amidst a period of significant contraction, the building and construction industry is beginning to see growth. As the world economy attempts to recover, countries are attempting to “build themselves” out of a recession.

Supply and shipping have been the first to experience the upturn in demand. Local mills in Malaysia have prioritised local distribution.

US and EU distributors are paying a premium on shipping. In the wake of notoriously low shipping prices cost have risen nearly $200/tonne (200% YOY).

A shift away from wood to aluminium for concrete casting will drive demand in China. Eight provinces have issued policies on aluminium alloy casting since May 2020 amid new government guidelines aimed at minimizing construction waste.

Container supply is also limited adding to increased shipping times of up to 25%. Docks are experiencing increased unload times from 1 – 3 weeks on top of stricter COVID safety procedures.

CPM Group’s director of commodities and asset management Carlos Sanchez expects base metals markets to return to normality in the latter quarters of 2021, supporting increases in prices.

“We expect zinc and nickel prices to rise sharply, followed by more modest increases in nickel and aluminium prices, with lead prices lagging,” he said.

Some experts see the challenging market conditions as an opportunity for the industry to reposition. For example

– Elimination of inefficient and outdated capacity,

– Elimination of capacity unlikely to meet increasingly tight environmental standards

– Acceleration of development projects aimed at better positioning the industry for a carbon-constrained future.

– Identifying and capturing growth opportunities in less-traditional markets where competitor materials have been exposed by COVID-19 and where aluminium has the potential to compete.

Metrix Group Managing Director Kelvin Morley hopes the industry will bind together to ride the short-term price and demand increases through to growth.

“We are working hard to innovate not only at a product and manufacturing level, but at procurement too. Our team worked tirelessly though the pandemic to build our non-traditional customer base and we intend to continue that growth through this challenging period.”

To find out more about how Metrix Group can help provide solutions for your business, send us an enquiry to sales@metrixgroup.com.au or call on 1300 792 493 to speak to one of our friendly consultants.

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