Consumers have looked aghast at rising aluminum prices this year and wondered how much longer it can continue.
The explanation that global economies are bouncing back from pandemic lockdowns has encouraged many to hope that once supply chains are restocked, demand will ease and aluminum prices will fall.
But several sources are suggesting the tightness of the aluminum market is more deep-seated.
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Aluminum prices and the demand picture
Inventory supply chain restocking is driving demand in North America and Europe. That process has been exacerbated by a nightmare global logistics market hampering deliveries and pushing up costs.
But a Reuters article points the finger firmly at a supply-side squeeze, principally in China and to a lesser extent among Western producers.
According to the post, China is in the grip of a power crunch. A shortage of coal supplies, toughening emissions standards and strong demand from manufacturers and industry have pushed coal prices to record highs and triggered widespread curbs on usage.
As a result, China has implemented rationing during peak hours in many parts of the country. Some residential customers are facing cuts and outages.