Aluminium prices melt up on booming recovery in global economy
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Aluminium prices are closing in on their highest levels in 10 years, as global demand for everything from beer cans to packaging rebounds from the pandemic.
Prices for the metal have surged 31 per cent in 2021, reaching a closing high of $2,615 a tonne this week.
The price rally is a welcome respite for an industry that has suffered from years of oversupply amid relentless expansion in China. Shares in the world’s biggest aluminium producers have risen by double digits this year, with Alcoa up 68 per cent and Europe’s Norsk Hydro up 47 per cent.
This year could trump 2010 as the “largest annual demand growth in history”, said Colin Hamilton, an analyst at BMO Capital Markets.
Aluminium has widespread uses in cans, packaging, construction and aerospace, benefiting when the economy expands. It is also used in electric cars, both in the battery packs and in the bodies of some premium models.
“As you have had a pretty broad-based rebound in the global economy aluminium is benefiting on nearly all fronts,” said Eoin Dinsmore, an analyst at consultancy CRU.
More than 74 per cent of all beer sold in the US is packaged in aluminium cans and bottles. BMO forecasts global consumption will rise 8.5 per cent this year to 68.2m tonnes.
Aluminium is also benefiting from constraints in supply. A drought in China’s Yunnan province has cut the area’s hydropower output, causing shortages and prompting local government to ask aluminium smelters to reduce their usage.
Yunnan was due to account for 50 per cent of the global growth in aluminium production between 2020 and 2023, so any shortfall there had global impact, CRU’s Dinsmore said.
“It’s incredibly important for the market — that’s where the supply growth is happening,” he added.
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