Companies that use aluminium across the world registered an improvement in operating conditions in December, following renewed contractions in November, as new orders and output increased slightly.
The seasonally adjusted Global Aluminium Users Purchasing Managers Index, a composite indicator of operating conditions at manufacturers that are heavy users of aluminium, reached 51.3 in December, from 51.4 in November, according to IHS Markit.
“Global aluminium users signalled a return to expansion mode for both output and incoming orders at the end of 2021," said Usamah Bhatti, an economist at IHS Markit. "The headline PMI figure ticked down to the weakest in the 18-month sequence, but this was due to a slower lengthening of input lead times and a slight reduction in stocks."
The Covid-19 pandemic has created supply-chain bottlenecks on a global scale, disrupting manufacturing and leading businesses to rethink how to make their supply chains more resilient and to invest in technologies like AI and robotic process automation. A commodity boom has increased the prices of products such as steel, copper and aluminium, among others, to record highs and has further pressured manufacturers across the world.
US and European-based companies experienced a faster improvement in operating performance compared to other parts of the world, the IHS Markit data showed.
Asia noted a second consecutive PMI reading below the 50.0 mark that separates growth from contraction, while the headline readings for the US and Europe rose slightly on the month.
Global aluminium users' production levels recorded a renewed rise in December, the 18th increase in 19 months, though the increase was fractional.
Aluminium users in Europe registered the sharpest expansion since July, while the US recorded a three-month high.
Global aluminium users showed a renewed increase in new work in December following a slight fall in November. The pace of expansion was marginal and well below the average seen throughout 2021, the data showed.
Asia-based firms reported a reduction in sales for the second month running, though the decline was only fractional, while new orders at aluminium users in the US and Europe rose at slightly quicker rates. Improvements were often linked to increased confidence as material shortages and price rises eased.
The employment rate was unchanged from November's 10-month low, despite workloads growing in December.
The data pointed to reduced pressure on suppliers, as the delivery delays were at the lowest level in 2021. However, the rate of deterioration was still significant and contributed to the softest rise in purchasing activity in the current 18-month sequence of growth amid difficulty sourcing inputs.
"Companies often indicated that activity and demand had been hindered by ongoing material shortages and supply-chain disruption, although there were signs that supply and price pressures were easing," Mr Bhatti said. "It is likely that this trend will continue into 2022, and allow for only a gradual return to growth as supply chains take time to recover, which may dampen prospects for the months ahead.”
The Middle East is home to some of the world’s biggest aluminium producers including Emirates Global Aluminium, Aluminium Bahrain and Saudi Arabia’s Maa’den, among others.
EGA, which is jointly owned by Abu Dhabi’s strategic investment arm, Mubadala Investment Company, and the Investment Corporation of Dubai, sold about 1.18 million tonnes of cast metal to customers in more than 50 countries in the first half of 2021.
EGA’s metal is the largest UAE export after oil and gas, with the aluminium sector accounting for 1.4 per cent of the UAE economy and supporting 60,000 jobs in the country.
