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Aluminum is at its highest since 2008. Its price soared last week on the London Metals Exchange. The price of silver metal is supported by the drop in production.
The price of aluminum is hovering around $3,200 a ton, a high in nearly 14 years. The course was supported last week by health restrictions in a producing city in China. The confinement imposed on February 7 in the Chinese city of Baise worries investors who anticipate a drop in production.
The foundries of this city indeed produce large quantities of aluminum, up to 2.2 million tons per year. This rise in prices can also be explained by the reduction in production capacity in China for environmental reasons. The Middle Kingdom wants to reduce air pollution, especially during the Beijing Olympics. To achieve this, the Chinese authorities have imposed the closure of certain smelters in order to limit the use of coal-fired power plants that produce electricity. The production process of aluminum is indeed very greedy in electricity.
Europe cuts production
The global supply is also limited by the drop in production in Europe. European foundries have already cut production by several hundred thousand tonnes due to high energy costs.
Geopolitical tensions between Ukraine and Russia do not help matters. Russia is one of the world’s largest aluminum producers and the threat of Western sanctions against Moscow in the event of an attack on Ukraine is also driving up prices.
Faced with this limited supply, demand should remain strong this year, silver metal is among the most used by various industries. Prices should therefore continue to rise. The American investment bank Goldman Sachs even estimates that a ton of aluminum will reach 4,000 dollars this year.
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