Declining inventories and supply issues push aluminium prices to 14-year highs!
Aluminium is definitely one of the hottest commodities of recent months as well as the beginning of 2022. Industrial metal prices sits around 3% below its record highs and the highest daily close may be made today. So far, there were only two times when aluminium price traded above current levels - once in 2006 and once in 2008. However, in both cases prices quickly pulled back. This time it could be different.
Aluminium inventories at LME are almost dry. Situation is a result of halting production in Europe in recent months on the back of high energy prices. Situation looked similar in China but in this country production costs were additionally inflated by new environmental regulations. However, even at current prices - $3,250 per tonne - energy and CO2 emission prices make aluminium production a barely profitable business. It should also be noted that Russia is an important producer of aluminium bauxite and imposing sanctions on the country may further limit global supply. Aluminium is also used during the ongoing energy transformation as it is used in manufacturing of wind farms. Having said that, it cannot be ruled out that prices will move even higher.