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Metal producers have also seen a substantial increase in demand this year. As worldwide demand for everything from beer cans to packaging recovers after the pandemic, aluminum prices are approaching their highest levels in ten years. The metal’s price has risen 31% in 2021, with a closing high of $2,615 per tonne this week.
The price increase is a welcome relief for an industry that has been plagued by years of the excess as a result of China’s unrelenting expansion. This year, shares in the world’s largest aluminum manufacturers have climbed by double digits, with Alcoa up 68% and Norsk Hydro up 47% in Europe This year could trump 2010 as the “largest annual demand growth in history”, said Colin Hamilton, an analyst at BMO Capital Markets.
Aluminum is widely used in cans, packaging, building, and aircraft, and it benefits when the economy expands. Also found in electric cars, in both battery packs and the bodies of select high-end versions.
“As you have had a pretty broad-based rebound in the global economy aluminum is benefiting on nearly all fronts,” said Eoin Dinsmore, an analyst at consultancy CRU. Aluminum cans and bottles are used to package more than 74% of all beer sold in the United States. Global consumption is expected to climb 8.5 percent this year to 68.2 million tonnes, according to BMO. “It’s incredibly important for the market — that’s where the supply growth is happening,” he added.
Aluminum is also benefiting from supply restrictions. Drought has reduced hydropower output in China’s Yunnan province, causing shortages and leading the local authorities to order aluminum smelters to minimize their usage. According to CRU’s Dinsmore, Yunnan was expected to account for 50% of worldwide growth in aluminum output between 2020 and 2023, so any deficit there would have a global impact