While demand for aluminum picks up after the global economic recovery, the energy crisis in Asia and Europe threatens to affect the supply of the metal.
“We think supply concerns are prevailing,” Daniel Briesemann, an analyst at German bank Commerzbank, told Bloomberg about the reasons for the current trend.
The Aluminum production was one of the first targets in the efforts of China (the world’s leading producer of the metal), to reduce electricity consumption in industrial plants.
Another motive of Beijing against the sector is that it, according to the government, has “over expanded” and needs to restrict its capacity in the future.
The Aluminum, used in products from food and beverage cans to cell phones, requires a large amount of energy for its production, requiring a total of 14 megawatts per hour for each ton. In other words, almost six years of consumption by an average household in Argentina (estimated at 2.4 megawatts per year).
In that sense, if the metal industry (which produces 65 million tons per year) is considered as a country, it would be the fifth largest consumer of electricity in the world.
According to the Bloomberg agency, some investors offered up to US $ 4,000 a ton in recent weeks, betting that the price will continue its trend towards new all-time records.
The The market is currently in a deficit and a need to stimulate investments in production outside of China, so the price could reach US $ 3,400 per ton in the next 12 monthsAccording to Mark Hansen, an economist at London-based exchange Concord Resources.
The opening or reactivation of plants outside of China is difficult because of the current price of energy: a smelter in Germany, for example, would have to pay US $ 4,000 for energy per ton, a value higher than the current prices of aluminum.
Meanwhile, according to Goldman Sachs analysts, there is the possibility that China will apply withholdings on metal exports to discourage them and increase its imports, shorting out the rest of the world market and increasing the risk of further price spikes.
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