Because aluminum prices spark
Aluminum prices have risen 40% since January and hit $ 3,000 per ton on Monday. That's why, between Guinea, China and Russia
Aluminum hit $ 3,000 per ton on Monday, the highest in thirteen years.
THE ROLE OF GUINEA
The military coup in Guinea , West Africa, last week contributed significantly to the rise in the price of the metal. Together with Australia, in fact, the country is one of the largest producers in the world of bauxite, a rock necessary for the production of alumina and, consequently, of aluminum: Guinea alone is worth more than 20 percent of total global production and hasa quarter of terrestrial reserves.
On 6 September, at the news of the coup, aluminum prices on the London Metal Exchange (the international reference) rose by 1.8 percent, reaching $ 2,775.5 per ton: the highest since May 2011 .
SUPPLIES TO CHINA AND RUSSIA
Guinea also has very significant trade links with two of the main aluminum producing countries: China (which holds the absolute record) and Russia. About half of China's bauxite supplies are estimated to come from Guinea; the country is essential for the supply of raw materials to the Russian company Rusal, one of the most important in the aluminum sector.
Rusal owns three bauxite mines and an alumina refinery in Guinea: it said it was ready to evacuate all Russian personnel should the security crisis in the country worsen. However, the business interruption would have a major impact on the company's operations, as Guinean bauxite is worth 42 percent of its total supplies.
The Chinese company Aluminum Corporation of China – the largest aluminum producer in China, which also owns a bauxite project in Guinea – said that all its activities are proceeding normally and that it has ample reserves of bauxite in its Chinese plants. .
ALUMINUM PRICES UP 40% FROM JANUARY
Even before the coup, in reality, aluminum prices were already tending upwards: since January 2021 they have grown by 40 percent due to the economic recovery from the coronavirus crisis.
Fears of a shortage in supplies of the metal, used in the automotive (especially electric vehicles), construction and packaging sectors, but also in renewable energy devices, are driving up prices.
THE ROLE OF CHINA
The price of aluminum is also high due to the energy policies implemented in China, the country that produces half of the aluminum in the world.
The process for obtaining the metal requires large quantities of energy: for this reason, the new regulations on energy consumption have led the governments of some Chinese regions – such as Inner Mongolia and Xinjiang – to have to reduce the production of aluminum. Furthermore, a period of drought in the province of Yunnan – another significant productive pole – has limited the availability of hydroelectric power.
According to estimates by the JPMorgan Chase bank, aluminum production in China could decrease by 5 percent this year.
THE OTHER CAUSES
Contributing to the drop in supplies and the rise in aluminum prices are two other minor news items: the fire at a refinery in Jamaica last August, which knocked out the plant; the protests of the workers of a foundry in Rio Tinto in Canada.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/aumento-prezzi-alluminio-cosa-succede/ on Wed, 15 Sep 2021 08:57:10 +0000.