Aluminium rises to new 13-year high
Chinese energy crisis and Guinea coup propel metal to new multi-year high
Both aluminium spot and futures rose to new 13-year highs on Monday, as the ongoing global energy crisis continued to affect the supply of the popular metal.
The metal enjoyed substantial gains last month after a coup in Guinea exacerbated supply anxieties. The West African nation is the world’s second-largest providor of bauxite, an ore essential in the production of aluminium.
Although the new military government quickly exempted bauxite mining and exports from the curfew and restrictions in an attempt to allay global fears, it has stressed its desire to step up domestic alumina production. Development of this intermediate product would increase internal mining revenues.
Emphasising the need for an amelioration of domestic mining conditions and industry, new leader Mamady Doumbouya recently maintained: “Scrupulous respect for environmental and social norms by mining companies is essential.”
Chinese energy crisis
The more recent rise in aluminium prices can be attributed to the ongoing power supply crisis in China. The world’s largest producer of aluminium has struggled with runaway energy costs, which have in turn hampered industrial activity. The effect has been exacerbated by Beijing’s implementation of regulations aimed at reducing carbon emissions and air pollution.
At the start of the year, the Chinese government outlined its aim to reduce carbon emissions per unit of GDP by 18% from 2021 to 2025. Across the same period it hopes to cut energy consumption per unit of gross domestic product (GDP) by 13.5%.
With the price of thermal coal almost doubling as a result of limited output and rising demand, the energy-intensive aluminium production has suffered.
Aluminium futures on the London Metal Exchange rose by 2.5% to $3,040 a ton on Monday, the highest level since July 2008. By 16:00 (BST), spot aluminium traded 3.1% higher at $3,105 a ton.