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Aluminum prices are approaching their highest level in 10 years as global demand for beer cans and packaging recovers from the pandemic.
Prices for the metal rose 31 percent in 2021, hitting a closing high of $ 2,615 per ton this week.
The price rally is a welcome respite for an industry that has suffered years of oversupply amid unstoppable expansion in China. The shares of the world’s largest aluminum producers rose in double digits this year, with Alcoa gaining 68 percent and Europe’s Norsk Hydro 47 percent.
This year could trump 2010 as “the biggest annual demand growth in history,” said Colin Hamilton, an analyst at BMO Capital Markets.
Aluminum is widely used in cans, packaging, construction, and aerospace, and benefits from it when the economy expands. It is also used in electric cars, both in the battery packs and in the bodies of some premium models.
“Having seen a fairly broad recovery in the global economy, aluminum is benefiting on almost all fronts,” said Eoin Dinsmore, an analyst at consulting firm CRU.
More than 74 percent of all beers sold in the United States are packaged in aluminum cans and bottles. BMO predicts that global consumption this year will increase by 8.5 percent to 68.2 million tons.
Aluminum also benefits from supply bottlenecks. A drought in China’s Yunnan Province has reduced hydropower production in the region, creating bottlenecks and prompting the local government to urge aluminum smelters to reduce their consumption.
Yunnan should account for 50 percent of global aluminum production growth between 2020 and 2023, so any deficit had a global impact, CRU’s Dinsmore said.
“It’s incredibly important to the market – that’s where the supply growth happens,” he added.