World aluminum prices are up 31% year-to-date, now hitting a decade high, and are expected to soon outstrip 2010’s record high as demand is forecast to grow the most this year. so far because the global economy recovered after the Covid-19 pandemic.
After many years of demand exceeding supply due to China’s sharp increase in output, this year’s aluminum market turned to a shortage due to strong demand for packaging materials after the Covid-19 pandemic.
Currently, the price of aluminum futures for delivery in 3 months on the London floor is at about $ 2,600. Share prices of major aluminum producers in the world this year have increased by double digits. Accordingly, the share price of Alcoa (USA) increased by 68%, while that of Norsk Hydro (Europe) increased by 47%.
Aluminum is widely used in many fields, from canned food to packaging, construction and aerospace – industries that are growing strongly along with the recovery of the world economy. In addition, aluminum is also used in electric cars, both in battery packs and in the bodies of some high-end models.
“Given the broad-based recovery of the global economy, aluminum is benefiting in most sectors,” said CRU analyst Eoin Dinsmore. More than 74% of all beer sold in the US is packaged in aluminum cans and bottles. BMO forecasts global aluminum consumption will grow 8.5% this year to 68.2 million tonnes.
BMO Capital Markets analyst Colin Hamilton said the aluminum market could now surpass 2010 as “the biggest annual increase in demand in history”.
Aluminum prices are increasing strongly also due to supply constraints. Drought in China’s Yunnan province has reduced the region’s hydroelectricity output, caused power shortages and forced local governments to order aluminum smelters to reduce electricity use.
CRU analyst Dinsmore said Yunnan accounts for 50% of world aluminum production growth between 2020 and 2023, so any shortfall there has a global impact. “This is very important for the market – that’s where the growth in supply happens,” said Dinsmore.
Source: VITIC / Ft
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