Like steel, global aluminum production slides

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Just as global steel producers have slowed in the past few months, global aluminum production has also dropped and aluminum prices recently touched a 13-year high.

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Global aluminum production drops

aluminum ingot stacked for export

Olegs/Adobe Stock

Amid surging aluminum prices, global aluminum production dropped in August, the International Aluminum Institute reported this month.

Global production totaled an estimated 5.70 million metric tons, down from 5.73 million metric tons the previous month.

However, output increased from the estimated 5.52 million metric tons in August 2020.

China, the top producer of aluminum in the world, churned out an estimated 3.30 million metric tons in August. That marked a decline from 3.33 million metric tons.

Meanwhile, production within the Gulf Cooperation Council rose from 496,000 metric tons to 504,000 metric tons in August.

Asian production ex-China held flat at 384,000 metric tons.

North American production fell 5.4% from 333,000 metric tons to 315,000 metric tons.

Supply squeeze

As MetalMiner’s Stuart Burns explained earlier this month, rising aluminum prices likely have more to do with the supply side of the equation (as opposed to demand).

Much of the squeeze, unsurprisingly, stems from developments in China, the world’s top aluminum producer. A shortage of coal has impacted China’s vast metals production sector, including aluminum.

“Against a backdrop of tight coal supplies, toughening emissions standards have forced some provinces to ration coal-fired power production to meet China’s pledge to cut energy intensity during this decade,” Burns wrote. “According to Reuters, output curbs have hit steel, aluminum and cement industries particularly hard. About 7% of aluminum production capacity has been suspended.”

Furthermore, the recent coup in Guinea has impacted the aluminum supply chain. Guinea holds the world’s largest reserves of bauxite, which is used in the aluminum production process. According to the South China Morning Post, China imported more than 47% of its bauxite from Guinea last year.

Aluminum prices rise

LME three-month aluminum closed Wednesday at $2,930 per metric ton, up 8.68% month over month.

Meanwhile, U.S. Midwest Premium three-month futures reached $0.335 per pound, rising 6.01% month over month.

Chinese primary cash aluminum reached $3,532 per metric ton, up 8.72% month over month.

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