Aluminium has a high market value and aluminium recycling has significant positive economic and environmental impact, making it a valuable metal. The fact that aluminium can be recycled infinitely, along with its high scrap value and the low energy needs for recycling make aluminium lightweight solutions highly desirable. The recycled metal’s contribution to the global output of aluminium products has increased from 17 percent in 1960 to 34 percent in 2019 and risen to about 40 percent by 2020. Global aluminium recycling rates are high, with approximately 90 percent of the metal used for transport and construction applications recovered, and over 60 percent of used beverage cans are collected. The demand for aluminium products is growing steadily in the Middle East because of their positive contribution to modern living. Aluminium finds extensive use almost all walks of life including transport, food and medicine, packaging, construction, electronics, and electrical power transmission. In fact, the use of aluminium exceeds that of any other metal except iron. It is the second most widely used metal whereas the ‘aluminium can’ is the most recycled consumer product in the world. 
Intermission impact of Covid Industrial commodity prices experienced a perfect bearish storm as economic activity worldwide ground to a halt as the coronavirus spread across the globe in Q1 of 2020. The price of crude oil dropped to the lowest levels in almost two decades. Falling energy prices caused production costs to decline, allowing producers to sell at far lower levels. Simultaneously, currency volatility and uncertainty in markets across all asset classes weighed on the metal sector. As the Covid-19 pandemic began to impact the Chinese economy, prices fell. China is the demand side of the equation for base metals, industrial commodities, and most raw materials. When the virus spread beyond China’s borders in February, prices slumped at the end of the month, and into March, the slump turned into price carnage. During 2020 the pandemic created a restraining factor for market growth. The lockdown across the world had impacted manufacturing, transportation, and human lives directly and indirectly with the industry. By the third quarter of 2020 aluminium sector bounced back as automotive industry demand surged. The Middle East domination The Middle East experienced a modest production growth in its aluminium sub-sector during 2020, bolstered by expansion in regional production capacity amid a recovery in aluminium consumption. In the beginning of 2020, UAE maintained its role as the region’s leading producer, although Bahrain also experienced an increase in output. Production in Qatar and Saudi Arabia saw a slower growth compared to regional peers. The Middle East has become a prominent aluminium producer over the past decade, particularly the Arab states that form the Gulf Cooperation Council (GCC). In 2019, the GCC accounted for 9.1 percent of global primary aluminium production, rising from 1.6 percent in 2010. Despite an aluminium price collapse earlier in 2020 amid the global pandemic, GCC primary aluminium production in the year through August has increased 2.7 percent year-on-year to 3.8bnt. In the coming years it is expected to see steady growth in Middle Eastern aluminium production, and United Arab Emirates (UAE), Bahrain, Qatar and Saudi Arabia are markets to watch. The UAE continues to maintain its position as the region’s largest aluminium producer, with support of Emirates Global Aluminium (EGA) USD1.4bn upstream integration. In 2019, the UAE accounted for 44.5 percent of aluminium production within the GCC and contributed the most aluminium in the MENA region. EGA, is the largest producer of premium aluminium, and was formed by the merger between Dubai Aluminium (DUBAL) and Emirates Aluminium (EMAL) in 2013. The conglomerate benefits from its recent integration, having shipped over 6.1mn dry metric tonnes of bauxite since the August 2019 commencement of its subsidiary Guinea Alumina Corporation (GAC). Despite Covid-19, GAC is on schedule achieve full production capacity of approximately 12mnt per annum by the end of 2020, solidifying EGA’s value chain and supply for its Jebel Ali aluminium smelter. Aluminium production in the UAE benefitted from its increased sustainability initiatives. For example, in September 2020, EGA reported its greenhouse-gas emissions intensity was 38 percent lower than the industry average. This will likely increase the firm’s attractiveness to environmentally conscious firms in Europe, such as automakers. In November 2019, EGA announced that its supply agreement with BMW would be increased and extended through 2022. Dubal has also announced several planned projects in the UAE such as a low-carbon aluminium rolling facility, electrical vehicle battery storage plant and cast aluminium wheel production facility. As such, we highlight upside to the country’s role in the burgeoning electric vehicle market. Aluminium production growth in Saudi Arabia and Qatar will remain steady. In 2019, Saudi Arabia and Qatar produced 965kt and 626kt of aluminium respectively, rounding out the top four MENA aluminium producers. In Saudi Arabia, American firm Alcoa has reported no Covid-19-induced operational disruptions during first half of 2020. Alcoa owns an integrated aluminium facility through a joint venture with domestic Saudi Arabian firm Ma’aden, featuring a smelting capacity of 740kt/pa. The complex features a rolling mill with a capacity of 460kt/pa, however Alcoa transferred its stake to Ma’aden in June 2019. Production in Bahrain will benefit significantly from the inauguration of a new potline at its Alba smelter. In 2019, Bahrain produced 1.4mnt of aluminium, making it the second largest contributor after the UAE. Aluminium Bahrain’s (Alba) smelter is the largest global aluminium smelter outside of China, and as of September 28, the firm remains committed to a production target of 1.54mnt in 2020. The firm previously inaugurated Potline 6 in November 2019, which is expected is bolster annual output by 540kt. Potline 6 features DX+ Ultra technology, created by EGA in 2016, signifying the UAE’s technical dominance in the regional aluminium market. Aluminium production growth in Saudi Arabia and Qatar will remain steady. In 2019, Saudi Arabia and Qatar produced 965kt and 626kt of aluminium respectively, rounding out the top four MENA aluminium producers. In Saudi Arabia, American firm Alcoa has reported no Covid-19-induced operational disruptions during first half of 2020. Alcoa owns an integrated aluminium facility through a joint venture with domestic Saudi Arabian firm Ma’aden, featuring a smelting capacity of 740kt/pa. The complex features a rolling mill with a capacity of 460kt/pa, however Alcoa transferred its stake to Ma’aden in June 2019. In September 2020, Alcoa further expanded the Sustana product line to include EcoSource, a low-carbon, smelter-grade alumina brand. At the same time, production growth in Qatar will be supported by Qamco’s ability to weather subdued aluminium prices due to its cost-efficiency advantage. Despite the stark drop in aluminium prices at the height of Covid-19-induced lockdowns, Qamco was able to record a net profit of USD4.1mn during H120. Qatar Aluminium Limited (Qatalum), in which Qamco owns a 50 percent interest, is one of the lowest cash-cost aluminium smelters in the world. UAE to continue to dominate in regional production 
Source: USGS, Fitch Solutions The Secondary Aluminium Sector The processing of secondary aluminium into semi-finished aluminium goods such as rods, bars, rolled products, castings, forgings and extrusions comprises the downstream segment of the industry. Extrusion products are mainly used in building and construction sector (B&C) in the form of windows, doors, curtain walls and formwork, bathroom, and kitchen applications etc. B&C accounts for almost 62 percent of extrusion consumption. Automotive sector also uses extrusion products for light weighting of vehicles in the form of extruded tubes, multi-hole profiles, door beam, bumper system etc. Due to low technological and capital intensity, the extrusion product market is mostly fragmented with many small to medium size players and a few larger players. The Middle East aluminium extrusion market size was valued at USD 2.05 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 3.1 percent from 2020 to 2027. The growth is attributed to increasing construction activities coupled with a rise in automotive manufacturing in the region. Construction activities in the region are augmented by an increasing number of residential projects, manufacturing facilities, and other commercial buildings. According to the statistics released by the Middle East Economic Digest (MEED) in 2019, the total value of capital projects in Saudi Arabia and UAE were about USD 1.2 trillion and nearly USD 713 billion, respectively. The growth is anticipated to be further augmented by ambitious projects like the development of a USD 500 billion mega-city called NEOM. Such projects are expected to boost aluminium extrusion demand in the Middle East over the forecast period. Gulf Aluminium Rolling Mill (Garmco), a Bahrain-based international aluminium rolling mill, and one of the largest downstream facilities in the Middle East, has embarked on a transformative role in shaping the climate agenda through the Garmco Green Initiative. As a result, Garmco has been in the forefront of developing some of the most high-quality products from recycled aluminium and ensuring that energy efficiency is at the heart of the way production processes are conducted. In April 2018, Emirates Extrusion Factory LLC installed a new powder coating line at its manufacturing plant in Technopark in Dubai, UAE. The expansion was intended to meet the growing demand for painted aluminium extruded profiles in the Gulf Cooperation Council (GCC). Some of the prominent players in the MEA aluminium extrusion market include: Alupco, Gulf Extrusions Co. LLC , Taweelah Aluminium Extrusion Co. (TALEX) LLC, National Aluminium Products Company SAOG (NAPCO), Balexco Bahrain Aluminium Extrusion Company, Emirates Extrusion Factory LLC. Circular economy is the heart of secondary aluminium industry, where the use of more aluminium scrap promotes recycling as a strategic necessity, in this line Sharif Metals Group is pioneers in production of secondary aluminium alloys for the automotive and for the local foundries. Sharif MetalsGroup continues to revive and restructure and has been advocating circular economy with BIR (Bureau of International Recycling) through their Ambassador programs around different regions of the world. Aluminium Market is upbeat in 2021 The price of aluminium moved 11.86 percent and on LME it was 8.28 percent higher in 2020. In Q3 and Q4, the base metal posted a significant gain for the year. Increasing aluminium demand in China and the US, rising freight costs, and tight scrap supplies fuelled the rally in the aluminium market and worldwide demand for aluminium has been climbing. The automotive industry is a key growth driver for the industry, not only due to the continued strong growth in private transportation worldwide, but also to the increasing pressure to utilise lightweight materials to protect the environment and the climate. In the lightweight construction sector, aluminium is the most sought-after metal in the areas of application. The trend towards energy-saving cars and the material’s excellent reusability, which allows the energy invested in its production to be entirely reclaimed, are certain to increase secondary aluminium consumption. Aluminium recycling facts Aluminium can be recycled almost infinitely, making it an incredibly sustainable material. Recycling aluminium requires up to 95 percent less energy than production from ore, avoiding emissions, including greenhouse gases. Around 75 percent of the almost 1.5 billion tonnes of aluminium ever produced is still in productive use today. The transportation industry is responsible for recycling the most aluminium products, both in tonnage (9 million tonnes) and efficiency (86 percent). On average, recycling one tonne of aluminium saves over 16 tonnes of greenhouse gas emissions, globally. Almost 70 percent of all aluminium beverage cans globally are recycled, which makes the aluminium can the most recycled drinks container on the planet. Recycling one aluminium can saves enough energy to recharge almost 20 smartphones. ——————————- The author is Chairman, Sharif Metals Group; Hon. Chairman, BMR; and Chairman, BIR Ambassadors Committee.
