Aluminum (ALI)
The world's most used non-ferrous metal. Lightweight, recyclable, and essential for transportation and packaging.
2-Minute Beginner Summary
Aluminum is everywhere: beverage cans, airplanes, cars, buildings, and packaging. It's 100% recyclable and becoming more important for EV lightweighting. Production is extremely energy-intensive, so aluminum prices are tied to electricity costs, especially in China.
What Is Aluminum?
Aluminum is a lightweight, corrosion-resistant metal. It's produced from bauxite ore through an energy-intensive smelting process.
Why ALI Matters
Transportation and construction use most aluminum. EV growth is driving demand as manufacturers reduce vehicle weight to extend battery range.
What Moves the Price?
Top 6 drivers affecting Aluminum prices:
Energy Costs
Smelting uses massive electricity. Power prices directly affect production costs.
China Production
China produces 60% of global aluminum. Policy changes have major impacts.
EV Lightweighting
EVs use aluminum to reduce weight and extend range.
Construction Demand
Building facades, windows, and structures use significant aluminum.
Recycling Supply
Secondary aluminum from scrap is 30%+ of supply.
Russian Supply
Russia (Rusal) is a major producer. Sanctions affect Western markets.
Market Structure
Spot vs Futures
LME is the global pricing hub. SHFE (Shanghai) is important for Chinese prices.
Contango & Backwardation
Often in contango due to high inventory storage capacity. Backwardation signals supply tightness.
Key Exchanges: LME (London Metal Exchange), SHFE (Shanghai Futures Exchange)
Contract Size: 25 metric tonnes per contract
Seasonality
Mild seasonality tied to construction and packaging cycles.
Peak Months: March, April, September, October
Low Months: July, August, December
Construction season and restocking periods drive demand. Summer and year-end are typically weaker.
Macro Sensitivity
Aluminum is a growth-sensitive industrial metal. China's economic policies have outsized impact.
- USD Sensitivity: negative
- Inflation Sensitivity: positive
- Growth Sensitivity: positive
- Rates Sensitivity: negative
Stock & ETF Exposure Map
Related Stocks
- AA - Alcoa: Largest U.S. aluminum producer
- CENX - Century Aluminum: U.S. smelter
- RIO - Rio Tinto: Major bauxite and alumina producer
- BHP - BHP Group: Diversified miner
- ARNC - Arconic: Aerospace aluminum products
- KALU - Kaiser Aluminum: Specialty aluminum products
Related ETFs
Key Calendar & Reports
LME Inventory Report (Daily)
Source: LME. Exchange warehouse stocks
China Aluminum Production (Monthly)
Source: NBS. World's largest producer data
IAI Global Statistics (Monthly)
Source: International Aluminium Institute. Global production and inventory
How to Trade Aluminum
ETFs like JJU offer exposure. Industrial stocks (AA, CENX) provide leverage. LME futures are the global benchmark.
Frequently Asked Questions
Why is aluminum production so energy-intensive?
Smelting uses electrolysis to extract aluminum from alumina. It takes 15 MWh to produce one tonne of aluminum.
How does recycling affect aluminum?
Recycling uses 95% less energy than primary production. About 75% of all aluminum ever made is still in use.
What is the Midwest Premium?
The cost above LME price to deliver aluminum in the U.S. Midwest. It reflects logistics and regional supply/demand.
How do EVs use aluminum?
Body panels, battery enclosures, frames, and wheels. EVs use 40-50% more aluminum than gas cars to offset battery weight.
What is bauxite?
The ore from which aluminum is extracted. Australia, Guinea, and Brazil have the largest reserves.
How do Russian sanctions affect aluminum?
Rusal produces 6% of global aluminum. Sanctions created supply uncertainty and supported prices.
Is aluminum a precious metal?
No, it's a base metal. Once called "silver from clay," it was more valuable than gold in the 1800s before modern smelting.
What is alumina?
Aluminum oxide (Al2O3), refined from bauxite. It's the intermediate product before smelting into aluminum metal.
Glossary
- Primary Aluminum
- New aluminum produced from bauxite ore through smelting.
- Secondary Aluminum
- Recycled aluminum from scrap.
- Bauxite
- Ore containing aluminum hydroxide, the raw material for aluminum.
- Alumina
- Aluminum oxide refined from bauxite before smelting.
- Smelter
- Facility that uses electrolysis to produce aluminum from alumina.
- Pot Line
- Row of electrolytic cells where aluminum is produced.
- Midwest Premium
- Regional delivery premium above LME price in the U.S.
- Ingot
- Cast aluminum bar ready for further processing.
- Billet
- Cylindrical aluminum used for extrusion.
- UBC
- Used Beverage Cans, a major source of recycled aluminum.