Aluminium

Key Takeaways

1. 1Aluminium is the most abundant metal in Earth's crust (~8%) yet commands 20–30% higher prices than copper because of the enormous electrical energy required to refine it
2. 2Energy costs represent 25–35% of production expenses — aluminium pricing is as much a story about power costs as it is about supply and demand
3. 3The Hall-Héroult electrolysis process is the key bottleneck: smelting aluminium from bauxite ore requires continuous, cheap, high-volume electricity
4. 4China dominates with roughly 35% of global output, making it the world's effective price-setter for refined aluminium
5. 5Production has migrated away from high-electricity-cost regions (US, Europe) toward cheaper-power areas (China, Russia, Iceland) over the past five decades
6. 6Demand is diversified across transportation (30%), packaging (20%), construction (15%), and electrical uses — reducing single-sector concentration risk
7. 7Recycled aluminium requires only 5–10% of the energy needed for primary smelting, and roughly 50% of current supply already comes from recycled material
8. 8Green aluminium — produced with renewable energy — is commanding growing premiums, especially in Europe and sustainability-focused supply chains
9. 9The London Metal Exchange is the primary trading venue, offering tight spreads and deep liquidity for aluminium futures
10. 10Russia's 2022 export sanctions showed that China's dominant production capacity can stabilise global supply even when a major regional producer is disrupted