Cars are not going to become cheaper

This time it is due to the rise in aluminum prices. The price of aluminum exceeded $3,200 per ton for the first time in 13 years.

The photo is taken from the site: https://currency.com/aluminium-rises-to-13-year-high

The price of aluminum on the London Metal Exchange (LME) increased by 3% and broke the mark of $ 3,200 per ton, follows from the data of the site. This is the maximum level since mid-July 2008.

If your attention was focused on gold, silver, or, for example, palladium and platinum, you might have overlooked the rapid rally of aluminum. For the first time in almost a year, the monthly growth of this metal is expressed in double digits, which made aluminum the leader of the September trades.

Although this growth was not out of the ordinary, it still deserves attention against the background of weak dynamics of other metals.

The September rally is primarily due to a combination of high demand and limited supplies from China.

The cost of aluminum has been rising since April 2020, but a sharp jump occurred in September of this year after the coup in Guinea, which ranks first in the world in bauxite reserves with 20% of world production. The rise in the price of aluminum, which is produced during the energy-intensive process, was also affected by the shortage of thermal coal in China and the general increase in energy prices.

The influence of this rise on the finished products made of aluminum

There is an increase in production in the aircraft industry segment. According to Boeing Corporation reports, in the third quarter of this year, aircraft production tripled compared to last year to 85 units, the 737 series.

At the same time, car production continues to decline. According to AutoForecast Solutions, the losses of North American car manufacturers amounted to 2.1 million units, while another 1 million cars are at risk due to a shortage of semiconductors. It is worth noting that in the current conditions, the consumption of 1.55 million tons of flat rolled products and 510 thousand tons of aluminum will decrease in the US market.

Of course, this situation will lead to the cars production cost increase, which, in its turn, will lead to higher car prices.

Future forecast

Growth of aluminum scrap processing volumes is thought to meet 50% of demand by 2050.

Aluminum is one of the most recyclable materials. According to the IAI, the receipt of scrap after the consumer comes from three main sources - packaging, vehicles, buildings and structures. In 2019, the global use of aluminum scrap reached a record 20 million tons - for the first time since IAI began recording data 70 years ago.

Marlene Bertram, director of IAI, said: "Aluminum demand is expected to grow by about 80% in 2050, and according to IAI forecasts, recycled aluminum will be able to meet half of this demand."

As for the prices on aluminum, the experts think that aluminum fits well into the "green" economy and therefore will remain a sought-after metal, the consumption of which will continue to grow. This will provide aluminum with a long-term increase in value. However, the current price increase is also largely due to short-term factors in the general chain of market imbalances formed after the acute phase of the pandemic crisis.

The situation, according to the experts, may stabilize after the prices of coal, gas and, after them, electricity will decrease in China and Europe.