Aluminium is the second most-used metal globally after steel, valued for its light weight, corrosion resistance, and recyclability. Production is concentrated in China (over half of global smelting capacity), the Gulf states (notably the UAE and Bahrain), Russia, and Canada, where access to low-cost electricity is decisive.
Unlike copper, aluminium's cost structure is dominated by energy input rather than raw ore scarcity — bauxite and alumina are relatively abundant, but the electrolysis process to smelt alumina into metal is highly power-intensive, linking aluminium prices closely to regional electricity markets.
Key Aluminium Price Drivers
- Energy costs — electricity is the single largest input cost in primary smelting
- China production policy — capacity caps and environmental curtailments materially affect global supply
- LME warehouse stock levels — a key gauge of near-term physical market tightness
- Transportation and construction demand — lightweighting trends in automotive and aerospace
- Recycling and scrap supply — secondary aluminium production requires roughly 5% of the energy of primary smelting
- Trade policy — tariffs and anti-dumping measures reshape regional trade flows