Energy transition demand will elevate aluminium prices

Significance

Aluminium smelters are being hampered by high power prices and shortages amid the switch towards green energy sources. China has been forced to start importing aluminium at record levels to tackle domestic shortages.

Impacts

• The green energy transition will strain power markets, increasing the challenge of producing energy-intensive aluminium.
• Supply will gradually diversify as outputs stagnates in China but looks set to rise in Argentina, Brazil, the Middle East and Russia.
• Consumers and governments in importing nations will increase aluminium recovery and recycling to cut pressure on the supply chain.