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Aluminium ingots at a London warehouse. The raw material bauxite is refined to make alumina, the starting point for aluminium production. (Photo: REUTERS)

Demand hike and supply snags push up aluminum price to US$3,000

Aluminium ingots at a London warehouse. The raw material bauxite is refined to make alumina, the starting point for aluminium production. (Photo: REUTERS)

Bloomberg reported this week that aluminium reached US$3,000 a ton in London for the first time in 13 years amid expectations that supply disruptions are here to stay, while demand keeps rising.

The surge is US$1,000 above World Bank predictions in 2020.

According to the World Bank in estimates given previously, the aluminium price was expected to increase to US$2,000 per metric ton (t) in 2021, a 17 per cent rise from an average of $1,703/t in 2020, and experience moderate growth to $2,050/t in 2022.

An aluminium factory in Hangzhou. Commodities prices have hit record highs due to resurgent demand and supply bottlenecks (Photo: Long Wei/VCG/Getty)

However, supply disruptions have caused prices to rise higher. Bloomberg analysts say the metal has surged about 14 per cent over the past three weeks as supply risks increase throughout the industry, from bauxite mining in Guinea and alumina refining in Jamaica to aluminium smelting in China and beyond.

Bloomberg outlined, “Chinese producers were dealt a fresh blow on Monday as Steelhome reported that Yunnan province, one of the largest aluminium producing provinces in the Asian nation, will enforce production curbs from this month in an effort to meet energy intensity reduction goals.”

Meanwhile, smelters in the European Union are also said to be facing rising costs with both carbon credits and power inputs at record highs, this according to Goldman Sachs Group Inc.

Sachs analysts including Jeff Currie were quoted by Bloomberg as stating, “In China and increasingly in the EU, policy risk to aluminum supply is growing.”