How did aluminum get so expensive?
The price of aluminum spiked this week to $2,740 a ton, a 10-year high, compared to $1,756 a year ago, in part because of the unrest in Guinea — the source of some material important to aluminum production. Beyond the recent hike, however, aluminum prices have mostly been rising all year.
The greening of the economy has a lot to do with that.
Aluminum is everywhere — in things we expect, like a can of sparkling water, to things we don’t always think about, like buildings, cellphones and solar panels.
Demand for aluminum is up for all kinds of “green” reasons, said Greg Wittbecker with CRU Group. “The aluminum market is going through a host of unprecedented changes.”
Aluminum doesn’t corrode easily; it conducts electricity well and it’s lightweight. That’s why there’s a huge demand for it from automakers that want lighter, fuel-efficient cars.
“But also the growing interest in electric vehicles,” Wittbecker said.
For the U.S. and other countries to meet greenhouse gas emissions goals, aluminum is a big player. But making it is not that green.
“It’s incredibly emission-intensive,” said Geordie Wilkes, who heads research at Sucden Financial. “In the smelting process, you use fossil fuels to create that power.”
A lot of aluminum is produced in China and traditionally relied on coal. Still, more aluminum production overall is now using green energy.
Halvor Molland with Hydro in Norway uses hydropower to produce aluminum. “We can’t really get enough of that material to our customers,” he said. Companies want green aluminum to show they’re green, too. “The end consumers are asking for low-carbon products,” Molland said.
That includes recycled aluminum, which can be recycled over and over again — and you don’t need a smelter to do it.
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