Aluminum prices hit 10-year high

The new actor of the upward momentum on the commodity side has been aluminum.

Against the contraction in supply, aluminum prices reached the highest level in 10 years due to the upward momentum on the demand side. Aluminum prices on the London Metal Exchange increased by 3 percent on the second trading day of the week, testing the level of $ 2,726 per ton. This was the highest level seen since 2011. The record level in aluminum prices was recorded as 3 thousand 300 dollars.

Aluminum, which is used in many product groups from automobile parts to household goods, followed a stagnant course with the decline in economic activity during the pandemic period, and an increase in demand was recorded in parallel with the recovery process in economic activity.

While the acceleration in demand was observed, the production cuts in China, one of the world's largest producers, put pressure on the supply side. The aluminum industry, where energy use is intense, was also on the agenda of the Beijing administration due to air pollution. Seasonal energy cuts were also one of the factors that brought down aluminum production.

The rise is expected to continue
While aluminum prices were at the peak of 10 years, institutions predicted that the upward momentum would continue. Institutions such as Goldman Sachs, Citi and Trafigura pointed out that there is upside space in aluminum prices as supply constraints deepen.

The use of aluminum in electric vehicles, where countries are more encouraged to reduce carbon emissions, has been one of the factors supporting the upward forecasts in the commodity.

Many analysts predicted that the market will remain tight for a while, due to the predictions that production constraints will continue in the face of China's release of aluminum in state reserves.

At the beginning of July, the Beijing administration started to offer 50 thousand tons of aluminum from state reserves to the market. On the aluminum front, 50 thousand tons of product to be driven was 1.5 percent of the previous month's production of 3.31 million tons.