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Aluminum jumped to the highest since 2008 as a deepening power crisis squeezes supplies of the energy-intensive metal that’s used in everything from beer cans to iPhones.

Ending last week’s trading session on the London LME Exchange, aluminum rose as much as 7% from a week earlier, reaching $3,170 a ton, the highest since July 2008, leading broad gains among base metals.

The world aluminum price has increased by more than 60%, surpassing the USD 3,100/ton mark by 2021 (Photo: Bloomberg)

Global energy crisis

The wave of metal supply cuts is spreading from China, India to Europe, stemming from a global energy crisis caused by shortages from natural gas to coal and oil, causing electricity shortages and increasing electricity prices, pushing up metal production costs. Natural gas stocks in many countries have been depleted and fears of a cold winter in the Northern Hemisphere are resulting in stiff competition among buyers in Europe, Asia and North America for energy in time to fill the stockpile for next winter.

Coal India, the world’s largest coal producer, cuts coal supply for the aluminum and steel industry (Photo: Reuters)

Industry insiders like to joke that aluminum is basically “solid electricity.” Each ton of metal takes about 14 megawatt hours of power to produce, enough to run an average U.K. home for more than three years. If the 65 million ton-a-year aluminum industry was a country, it would rank as the fifth-largest power consumer in the world.

That meant aluminum was one of the first targets in China’s efforts to curb industrial energy usage. Even beyond the current power crisis, Beijing has placed a hard cap on future capacity that promises to end years of over-expansion and raises the prospect of deep global deficits. Energy costs surging across Asia and Europe mean there’s a risk of more supply cuts, and some investors are betting that prices have much further to run.

Dutch aluminum producer Adel cuts output because of high electricity prices (Image: aldel.nl)

A number of aluminum plants in China are being mothballed and the country’s production has probably peaked, at least in the short term, said Mark Hansen, chief executive officer at Londonbased trading house Concord Resources Ltd. Aluminum producers in Europe are also faced with sky-high electricity prices, which erode profit margins and encourage them to cut production.

Aldel, the Netherlands’ only producer of primary aluminium, announced that it is halting production of primary aluminium by 60-70% at its Delfzijl plant due to the current high electricity. Coal India, the world’s largest coal miner by production, said in a statement that it had stopped all online auctions of coal except those meant for the power sector. Recently, Coal India announced that it will suspend coal supply to all other partners except power plants as India battles one of its worst power supply deficits in years. Therefore, the aluminum industry in this country is at a standstill as a result of Coal India’s decision as coal cannot be imported due to very high global prices.

The domestic aluminum industry needs to take the lead in contingency planning

In the face of a sharp increase in global aluminum raw material prices and complicated developments, domestic aluminum producers must prepare backup raw materials for long-term use in order to limit drastic fluctuations in the domestic aluminum market in the future.

Stockpiling of raw materials by domestic aluminum enterprises before global fluctuations (Photo: Dinostar Aluminum Factory – Ngoc Diep Aluminum Joint Stock Company)

Dinostar Aluminum Factory of Ngoc Diep Aluminum Joint Stock Company actively optimizes production operation solutions to reduce costs and to stabilize product costs and share burden with consumers, customers and partners.

Aluminum prices are expected to rise sharply in the future

The approaching winter is expected to exacerbate the energy crisis, with ANZ forecasting high electricity prices and possible prolonged power outages that will affect metal supply in the coming months.

Aluminum prices have risen more than 60% this year, but investors expect the metal to gain even more. According to Bloomberg, in recent weeks, investors have been buying calls with strike prices of up to $4,000 a ton, effectively betting that prices could move significantly beyond that level to new all-time high.

Due to supply constraints in China, aluminium prices will continue to rise in 2022 (Image: Financial Times)

Investors are watching for a possible hit to Chinese aluminum exports, traders and analysts say. With its own production under pressure and demand booming, the country has been importing ever-greater quantities of primary metal. However, it’s still exporting huge volumes of semi-finished aluminum, in part supported by tax rebates.

Analysts including Goldman Sachs say there’s potential for Beijing to lower or remove the value-added tax rebates on exports to slow the flow of metal beyond its borders. With China likely to continue importing huge volumes of aluminum next year, that could leave the rest of the world desperately short, and raises the risk of a violent price spike. Separately, prices got an extra boost after the European Union imposed an antidumping duty on flat-rolled aluminum from China.

“The global metal market in 2022 will be the tightest it’s ever been,” said Eoin Dinsmore, head of aluminum primary and products research at CRU. “The rest of the world cannot deliver these quantities to China indefinitely.

According to Reuters, Bloomberg

Aluminum Billet is cast into a cylindrical round bar and is produced through heat treatment and alloying according to certain standards. It is used as raw material in the production of aluminum products for construction, transportation, energy and electronics, etc.

Aluminium Billet branded Dinostar is one of the key products of Ngoc Diep Aluminum Joint Stock Company (under Ngoc Diep Group), with annual supply volume of up to 60,000 tons to the domestic and overseas market. In addition to its popularity and trust among domestic aluminum manufacturers, Dinostar Aluminum Billet is very popular and trusted by foreign aluminum manufacturers for the following reasons:

1. Superior Quality

Dinostar Aluminum Billet is a clear demonstration of Ngoc Diep Group’s business philosophy: “Putting quality at the center of development”. Products are manufactured from high-quality raw materials at Dinostar Aluminum Factory, meet by strict domestic and international standards.

Different from ordinary billet products on the market, Dinostar Aluminum Billet has the main ingredient of imported high-grade Ingot aluminum grade A with a pure aluminum content of up to 99.89% and an iron content of less than 0.05% – limited maximum oxidation state. In addition, to produce high-quality billet aluminum requires large investment costs in machinery systems and production lines, so not all businesses can afford to invest. Dinostar Billet Aluminum is produced at the high-tech Dinostar Aluminum Factory with a scale of up to 120,000 m2 with a modern production line system imported from Japan, Germany and Italy. The system of 3 kilns and the state-of-the-art casting and homogenization system has a capacity of up to 60,000 tons of billets per year. As a result, Billet Dinostar products have smooth surface, outstanding strength and corrosion resistance, flexible bending and good melting temperature, convenient for production.

Dinostar Aluminum Billet is produced on the most advanced machinery line system

Aluminum profile products manufactured from Billet Dinostar fully meet the requirements of physical and mechanical properties such as tensile strength, yield strength, elongation,… and the alloy chemical composition complies with strict standards. Slots of Vietnam and international standards such as TCVN 12513, JIS H4100 standard of Japan, ASTM standard of the United States of America, etc. Surface of aluminum bar after extrusion has good corrosion resistance, easy surface treatment. , powder coating or anodizing.

2. Diversified and suitable for customer needs

The Dinostar Billet Aluminum product line has 6000 series, 7000 series with various sizes from 4 inches to 9 inches and is cut to standard lengths of 5.8m, 6m, … depending on the needs of customers. In addition, Billet Dinostar aluminum products are alloys of aluminum and elements Si, Mg, Cu, …, combined to form a variety of aluminum alloys such as A6061, A6063, A6005A, …, meeting the needs of customers. Diversity of customers in the fields of construction, manufacturing industry and consumer goods,… High strength, good formability, ease of processing and excellent corrosion resistance are the advantages that make Billet Dinostar aluminum becoming a popular choice for manufacturing aluminum door systems in construction as well as used in mechanical engineering, transportation, energy, electronics, telecommunications, etc.

In addition, the R&D Center is built in the Dinostar Aluminum Factory itself with modern equipment, in order to constantly research, improve and develop products to better meet the needs of customers. customers and markets.

DINOSTAR Billet Aluminum products come in a variety of sizes and types, and are continually being improved and developed.

3. Environmentally friendly

The trend of using green products is becoming more and more popular and driving the entire manufacturing industry to change. Today’s market not only requires quality products, but also requires environmentally friendly products and services right from production to consumption.

Dinostar aluminum in general and Billet Dinostar aluminum in particular have passed rigorous tests of international inspection organization SGS to meet the RoHS (Restrict of Hazardous Substances) green standard issued by the European Union. This is a strict standard, requiring clean materials, limiting hazardous substances on products to ensure safety for the living environment and human health. Dinostar aluminum has become a pioneer brand in the domestic and foreign aluminum market in the trend of using green materials of international quality, safety and environmental friendliness.

Aluminum Billet Dinostar is certified as a green product, protecting the environment

With the above advantages, Billet Dinostar Aluminum is always appreciated for both quality, product variety and safety for the environment. Not only stopping at the domestic market, over the years, Billet Dinostar Aluminum has successfully exported to demanding markets such as the US, Canada, Australia and Europe, contributing to affirming the position of Vietnamese aluminum in the international market. economic.

Aluminium prices hit their highest levels in a decade on Monday as concerns grow about shortages following news of a coup in Guinea, the world’s largest reserves of bauxite, and production cutbacks in China, the world’s biggest producer.

A unit of Guinea’s military seized power and suspended the constitution, triggereing concerns about the supply of bauxite needed to make aluminium.

Guinea has the world’s largest reserves of bauxite, the globe’s main source of aluminum.

(Photo: Reuters)

Guinea supplies about 25 per cent of the world’s bauxite, mostly to China and Russia. The country shipped 82.4 million tons of the mineral globally last year, according to government data. Guinea is China’s largest source of bauxit. In the first seven months of this year, Guinea supplied China with 55 per cent of its bauxite supply, according to analysts at ING. China, in turn, is the world’s largest producer of aluminium. Rusal, the world’s third-largest aluminum producer, owns three bauxite mines in the country, which accounted for 50 per cent of its total supplies last year.

Guinea exported 82.4 million tons of the mineral globally last year (Photo: Bloomberg)

The unrest did not have any immediate impact on bauxite operations, however it extended a rally in aluminium prices to multi-year highs and boosted shares in aluminium producers.

Aluminium prices have hit decade high due to supply concerns (Photo: Bloomberg)

Aluminium prices on the London Metal Exchange rose as much as 1.8% to $2,775.50 a ton, the highest since May 2011. In China, futures jumped as much as 3.4% to the highest since 2006. Shares in Russian aluminium producer Rusal rose 4 per cent in Moscow on Monday before edging back, while those of Aluminum Corporation of China were up 5 per cent on the back of higher aluminium prices. In Europe, shares of Norsk Hydro rose 5 per cent in Oslo.

The events in Guinea are “adding fuel to the fire, not least since the whole bullish narrative for aluminium is about tight supplies”, said Julius Baer analyst Carsten.

An aluminium factory in China (Photo: Aluminium Insider)

Aluminium prices have also been fuelled by production cutbacks in China, where the Communist party is increasing scrutiny over highly polluting industries as it looks to meet its climate goals. A report from Bloomberg on Monday said southern Guangxi province may order production cutbacks in aluminium and steel in a bid to reduce pollution.

Aluminium production in China has already been hit by electricity shortages over the summer, especially in south-west Yunnan province. A drought in China’s Yunnan province has cut the area’s hydropower output, causing shortages and prompting local government to ask aluminium smelters to reduce their usage.

Aluminium prices have risen by about 38% this year. Goldman Sachs increased its 12-month price target for aluminium to $3,200 a tonne.

Abundant reserves of Ingot, aluminum raw material, of Ngoc Diep Joint Stock Company

(Photo: Ngoc Diep Group)

Ngoc Diep Aluminum Joint Stock Company with the Dinostar Aluminum brand, the top aluminium manufacturer in Vietnam, constantly monitors market in order to anticipate and respond appropriately, bringing the highest benefits to customers and partners.

Source: Financial Times, Bloomberg, Reuters