Experts, manufacturers and consumers are not optimistic that the aluminum market will cool down.
Supply chain difficulties have roiled commodity markets, pushing aluminum prices to a 13-year high this week. The aluminum price fever is unlikely to cool down anytime soon.
This is the message from manufacturers, consumers, traders and shippers at the largest aluminum conference in North America that ended on September 10. The trading session on September 10, aluminum price increased 2.7% to 2,916 USD/ton.
Aluminum prices have surged 48% this year due to surging demand, transportation bottlenecks and production restrictions in China, sparking inflation fears and causing major headaches for consumer goods manufacturers. They are facing a severe shortage of raw materials and a sharp increase in costs.
Many conference attendees said high aluminum prices are likely to continue into 2022, with some even expecting it to take up to five years to resolve the issues.
Global supply chains, with container shipping as their backbone, are struggling to keep up with demand for goods and overcome labor disruptions caused by the Covid outbreak. The most complicated problem in the aluminum industry right now is the shortage of workers at the factories and the lack of truck drivers to transport the readily available metal.
Aluminum price chart for the past 6 years on the London Metal Exchange
“For us, it’s been a mess and as we look to 2022, we don’t see this going away anytime soon,” said Mike Keown, CEO of Commonwealth Rolled Products at the Harbor Aluminum Summit in Chiacago. . “We think that’s just the beginning.”
Several aluminum conference attendees said the labor shortage was their biggest problem and did not know when the situation would subside.
The sharp increase in aluminum prices comes as producers and consumers negotiate annual supply contracts. Buyers want to keep the old deals as long as possible because the shipping fees are too high. They are also waiting for a signal from Russia, the world’s second largest aluminum producer, whether to keep the expensive export tariffs and next year.
All of this signals that aluminum prices could rise even higher. Harbor Intelligence said it expects the average aluminum price in 2022 to be $2,570/ton. This is about 9% higher than the average so far for 2021.
“Chaos is the right word. I have never experienced a period where so many adverse factors came at once.”
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