Aluminum & Building Materials Market Analysis 2018: Trade Dynamics and Pricing

Executive Summary

The global aluminum and building materials market faces significant disruption in 2018 from US tariffs on steel and aluminum imports (Section 232), Chinese production policies, and robust construction sector demand. This analysis examines market dynamics, pricing trends, and strategic considerations for importers and construction industry participants.

Aluminum Market Fundamentals

Global Supply-Demand Balance

World aluminum production reached 63.7 million tonnes in 2017, with continued growth in 2018 despite policy headwinds:

US Section 232 Tariff Impact

The March 2018 imposition of 10% tariffs on aluminum imports significantly affected market dynamics:

• Price Premium: US Midwest Premium surged to $0.21/lb (+75%) vs. pre-tariff $0.12/lb
• Import Volumes: Aluminum imports down 18% in H1 2018 vs. H1 2017
• Domestic Production: US smelters restarting capacity (Alcoa Warrick, Century Aluminum)
• Supply Chains: Construction and automotive sectors facing 8-12% cost increases

Architectural Glass Frame Market

Product Categories and Applications

The architectural frame market segments into distinct product categories serving different construction needs:

Construction Sector Demand

Building materials demand remains robust despite tariff headwinds, driven by:

• Commercial Construction: Office and retail development supporting curtain wall demand
• Residential High-Rise: Urban densification driving aluminum window systems
• Green Building: Energy efficiency standards increasing demand for thermal-break frames
• Renovation Market: Window replacement cycle providing stable demand base

Key Supplier Regions

China - Dominant Producer

Chinese manufacturers dominate global aluminum extrusion and frame production:

• Aluminum extrusion capacity: 18 million tonnes annually (60% of global)
• Major exporters: Guangdong, Shandong, Jiangsu provinces
• Price advantage: 15-25% below US/European production
• Export volumes: 4.8 million tonnes of aluminum products (2017)

European Suppliers

European manufacturers compete on quality and engineering:

• Premium positioning with thermal-break technology
• Strong market share in Middle East and North Africa
• Leading brands: Schüco, Reynaers, Aluk
• Price premium: 30-40% above Chinese products

Import Strategy Considerations

For US Market Participants

1. Tariff Management: Evaluate exemptions, consider Canadian/Mexican sourcing under NAFTA
2. Inventory Strategy: Build strategic inventory ahead of further trade policy changes
3. Supplier Diversification: Balance Chinese suppliers with alternative sources
4. Value Engineering: Work with architects to optimize frame designs for cost

For Middle East/Global Markets

1. Chinese Sourcing: Leverage cost advantages for value-engineering projects
2. European Premium: Specify European systems for high-end developments
3. Quality Verification: Implement rigorous testing protocols for Chinese products
4. Payment Terms: Utilize LC/escrow for first-time Chinese suppliers

Price Outlook and Forecasts

Conclusion

The aluminum and building materials market in 2018 navigates significant trade policy disruption while maintaining robust demand from global construction sectors. For importers and construction industry participants, the current environment demands active supply chain management, strategic sourcing, and close monitoring of policy developments.

We recommend diversified sourcing strategies balancing cost, quality, and supply chain resilience. Chinese suppliers offer compelling value for cost-sensitive applications, while European premium products serve high-specification projects. US market participants should continue monitoring tariff exemptions and domestic capacity restarts as the market adjusts to new trade realities.