For many years, aluminum prices have been relatively low due to high levels of supply, but in the last few months, that has changed drastically. Supply chain challenges and climate change factors have both greatly contributed to the soaring prices which is starting to have a huge impact across numerous industries.
There is a little light on the horizon though. Prices have been dropping since the middle of October, but admittedly they still remain significantly high for now.
Below, we detail how this all came to be and why prices increased so dramatically.
The Effect of Supply Chain Problems on Aluminum Prices
One of the most abundant types of metal in the world, aluminum’s incredible versatility makes it useful in a significant number of industries and applications.
However, because aluminum is used in so many different ways, any disruption to its supply often has major consequences on numerous industries.
This is the issue the aluminum production facilities are facing now. The majority of aluminum is refined in China, with other major production facilities across Asia. Due to the Chinese government cracking down on climate control measures, aluminum refinement factories and other metal refinement factories are being affected. Why? The government is focusing on reducing smelting to decrease pollution to meet and attain green targets.
Smelting isn’t the only form of production that’s facing problems though. The pandemic as a whole drastically affected many production companies. Layoffs then attempts to re-staff factories have been challenging and many companies aren’t running at their full capacity and the ones that are don’t have the ability to produce enough of the demand.
All of these factors mean the supply has dropped for aluminum but demand has remained high—thus inflating prices for it around the world.
What This Means for the Future of Aluminum and Items Made From Aluminum
Unfortunately, this is bad news as a whole for consumers and manufacturers. China has no intention of being lenient with their green targets for aluminum production and smelting in the future and demand for aluminum as a material is unlikely to drop.
Unless other means of aluminum production are created or improved to a level where it’s less damaging to the environment to create, the rising costs of aluminum will eventually be passed on to consumers.
What Millennium Alloys Is Doing to Help
Despite all of this, we’re doing what we can as an aluminum supplier to help consumers of all types. One of the notable ways we’re doing this is by continuing to offer competitive pricing. We don’t believe in “gouging” our customers on pricing and will price our aluminum materials in a way that still makes it financially possible for hobbyists and businesses alike to purchase the materials they need.
Overall, expect to see products that have aluminum components increase in price in the coming years if aluminum production isn’t changed to evolve from the current supply chain issues the manufacturing industries are facing.