Market Trends of Base Metals Industry
Growing Demand from the Construction Industry
- Chosen for their durability and strength, base metals used in the construction industry serve a wide range of functions. The most common of them are aluminum and copper.
- Aluminum is commonly used in the construction industry because it is resistant to corrosion, highly conductive, and ductile. Due to its resistance to harsh weather, the metal is used in windows, doors, and wire, as well as outdoor signage and street lights. The metal is processed into sheets, tubes, and castings. HVAC ducts, roofs, walling, and handles are made of aluminum. Furthermore, they are frequently found in the construction industry.
- Copper-based tubing is often used to construct pipes in buildings. Copper is a ductile and malleable metal, and it is resistant to corrosion from water and soil. It is also recyclable. Copper tubing is easily soldered, forming lasting bonds. All of these properties make this metal ideal for piping and tubing. Rigid copper tubing is ideal for hot and cold tap water pipes in buildings, while soft copper tubing is frequently used to make refrigerant lines in HVAC systems and heat pumps.
- According to a study by the Institution of Civil Engineers (ICE), the global construction industry is expected to reach USD 8 trillion by 2030, primarily driven by China, India, and the United States. Therefore, the growing construction industry is expected to have an upside demand for base metals market.
- According to the US Census Bureau, the value of private construction in the United States in 2022 was USD 1.43 trillion, which shows an increase of 10.47% compared to 2021, which amounted to USD 1.28 trillion. Residential construction spending in 2022 amounted to USD 899.1 billion, which showed an increase of 13.3% compared to 2021, while non-residential construction spending amounted to USD 530.1 billion, which showed a decrease of 9.1% compared to 2021. Therefore, increasing in the private constructions in the United States is expected to create an upside demand for base metals market from the country's construction industry.
- Additionally, in May 2022, the the United States government announced to the allocation of over USD 110 billion for carrying out 4.3 thousand specific projects for modernizing airports and ports and rebuilding roads and bridges. These projects are expected to benefit around 3.2 thousand communities across the 50 states.
- Moreover, China is in the midst of a construction mega-boom. The country has the largest building market in the world, making up 20% of all construction investment globally. The country alone is expected to spend nearly USD 13 trillion on buildings by 2030.
- Furthermore, the residential sector in India is on an increasing trend, with government support and initiatives further boosting the demand. According to the India Brand Equity Foundation (IBEF), the Ministry of Housing and Urban Development (MoHUA) allocated USD 9.85 billion in the 2022-2023 budget to construct houses and create funds to complete the halted projects. Therefore, the increasing investments in the residential sector are expected to create an upside demand for the base metal market.
- According to the Canadian Construction Association, the construction sector is one of Canada's largest employers and a major contributor to the country's economic success. The industry contributes 7% of the country's Gross Domestic Product (GDP). For instance, according to Statistics Canada, total investment in building construction increased by 3.3% during Q2 2022, and reached USD 62.3 billion, thus increasing for the third consecutive quarter. The residential investment reached USD 46.4 billion, largely due to increased spending on building multifamily homes. The non-residential sector increased by 2.6% to USD 15.8 billion.
- In addition, various government projects, such as New Building Canada Plan (NBCP) and Affordable Housing Initiative (AHI), are supporting the sector's growth. In Canada, the residential and commercial sectors have been witnessing steady growth in the recent past. The country witnessed some of the largest construction projects, such as Panda Condominium, Harwood Condominium, Power and Adelaide Condominium, and Amazon Distribution Centre/Ottawa.
- Due to the growing number of commercial and hotel development projects in Morocco, the demand for base metals market is expected to have an upside demand. For instance, In Morocco, Hilton currently operates five hotels and has six hotels under development across the country, with Conrad Rabat Arzanaset to open in the coming months and the DoubleTree by Hilton Marina Agadir Hotel & Residences set to open in Q3 2023.
- Owing to all above mentioned factors, the demand for base metals is expected to have an upside demand during the forecast period.
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Asia-Pacific Region to Dominate the Market
- The Asia-Pacific region is projected to be the largest market for base metals during the forecast period. The increasing investments in the construction industry, rising electrical and electronics production, and surging demand for heavy equipment, with multinational companies investing in the industrial sector, are some of the major factors driving the demand for base metals in the region.
- China holds the largest Asia-Pacific market share for the base metals market. The demand for the base metals market is expected to rise throughout the forecast period due to rising investments and construction activity in the country. China is a huge contributor, as it has been one of the leading investors in infrastructure worldwide over the past few years. For instance, according to the National Bureau of Statistics (NBS) of China, in 2022, the output value of construction works in China amounted to CNY 27.63 trillion (USD 4.11 trillion), an increase of 6.6% compared with 2021.
- Demographics in China are expected to continue to spur growth in residential construction. Rising household income levels combined with population migrating from rural to urban areas is expected to continue to drive demand for residential construction sector in the country.
- Moreover, China is also the largest manufacturer of automobiles in the world. China is one of the largest producers of passenger cars, due to the improving logistics and supply chains, increased business activity, and the country's raft of pro-consumption measures, among other factors contributing to the passenger car market products in the country. Therefore, this has increased demand for base metals consumptuon from the passenger car segment. For instance, according to OICA, in 2022, the passenger car production in China amounted to 2.38 million units, which shown an increase of 11% compared to 2021.
- In India, increasing regulations on vehicle emissions, advancement in vehicle safety, the introduction of driver-assist systems in vehicles, and rapidly growing logistics in the retail and e-commerce sectors, have been significantly driving the demand for new and advanced Light commercial vehicles (LCVs). For instance, accroding to OICA, in 2022, light commercial vehicle production in India amounted to 617.4 thousand units, which showen an increase of 27% compared to 2021 and a recovery of 60% compared to 2020.
- Moreover, increased investments and advancements in the automobile industry in India is expected to increase in the consumption of base metals. For instance, in April 2022, Tata Motors announced plans to invest USD 3.08 billion in its passenger vehicle business over the next five years. Therefore, increasing in the peroduction of automobiles and increasing investments in the automobile industry is expected to have an upside demand for base metals market from the country's automotive and transportaion industry..
- India has the fourth largest railway network with a route length of 123.24 thousand kilometres and 13.45 thousand passenger trains and 9.141 thousand freight trains transporting 24 million passengers and 203.88 million tonnes of freight per day from 7.35 thousand stations. Recent developments and government initiatives in railways in India may boost the market studied. As per Union Budget 2022-23, Ministry of Railways have been allocated INR 1.40 trillion (USD 18.40 billion). Thus boosting the base metals market from automobile and transportation industry.
- Copper, tin, nickel, and aluminum are some common metals used by the electronics industry. The Asian region is the largest producer of electrical and electronics across the globe with countries such as China, Japan, South Korea, Singapore, and Malaysia dominating at the global level.
- In Japan, according to JEITA (Japan Electronics and Information Technology Association), domestic shipments of consumer electronics in Japan reached a value of JPY 125.2 billion (USD 964.04 million) in December 2022. While March was the strongest month for consumer electronics shipments during2022, with around JPY 125.5 billion (USD 966.35 million), May was the weakest, with the value falling to JPY 86.4 billion (USD 665.28 million). Therefore, increasing in the shipments of consumer electronics from the country is expected to have an upside for base metals market.
- Hence, all such favorable trends and investments in the region are expected to drive the demand for base metals during the forecast period.
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