The price of a ton of aluminium has increased in global markets by about $500 over the past few weeks, trading currently at roughly $3,200 per ton, the highest price since 2008.
Local prices of aluminium have increased accordingly, with the price of a ton of the metal soaring by more than LE5,000 this month. The price of a ton of aluminium wire in the local market reached LE55,000 this month, compared to LE51,000 last month, and the price of a ton of aluminium cylinders traded at LE58,000, compared to LE53,000.
The price of a ton of cold rolls has reached LE65,000, compared to LE59,000 last month.
The price hikes have come as a result of the energy-intensive nature of aluminium production, as each ton produced consumes around 14 Megawatts (MW) of electricity, an amount that would cover a household’s consumption for more than three years.
World energy prices have been rising fast, and they have had knock-on effects on the price of aluminium.
China, the world’s largest aluminium producer and consumer, has decided to impose new restrictions on industrial energy consumption and to limit carbon emissions, as aluminium production is responsible for about four per cent of China’s total emissions.
China’s Guangxi province, one of the major aluminium-production hubs in the country, is set to impose a 50 per cent increase on electricity prices for its energy-intensive industries. Such steps are putting a lid on aluminium production.
As a result of limiting local production of aluminium amid booming demand, China has been importing greater quantities of the metal. This has fueled expectations of further price hikes in the coming months because of the shortfall in the supply.
Aluminium is used in the production of household appliances, electrical devices, and cars and airplane parts.
“Engineering, household appliances, and the electrical industries are the most-affected sectors in the current aluminium crisis,” said Mohamed Hanafi, head of the Metallurgical Industries Chamber at the Federation of Egyptian Industries.
He added that recent increases in aluminium prices would lead to stagnation in the household appliances market. The latter will increase in price, and consumers will be less likely to opt for buying, Hanafi said.
The rise in aluminium ore prices on international stock exchanges increases the burden on manufacturers in Egypt, he added.
Hanafi said that the price of aluminium ore has prompted many manufacturers to stop some production lines. The prices of items that include aluminium have all increased according to the percentage of the metal they contain.
“The local market no longer has the ability to absorb new price increases in the light of a significant decline in local purchasing power,” Hanafi said, adding that he expects the prices of items that are made of aluminium to continue to rise during the coming period.
“The prices of electrical appliances have increased by five to 15 per cent during the past months in the local market, due to increases in the prices of metals, the most important of which is aluminium,” he pointed out.
Ehab Elwani, spokesperson of the Egyptian Aluminium Company (EAC), explained that local prices depend primarily on international ones. The rise in energy prices, a major factor in production, is one of the main reasons for the increase in aluminium prices, he said.
Electricity accounts for about 40 per cent of the cost of aluminium production in Egypt.
Elwany added that the EAC works in the production, marketing, and distribution of aluminium and aluminium ores, alloys, and derivatives, both locally and abroad.
It has one of the largest aluminium plants in the region, with a production capacity of 320,000 tons annually.
Egypt’s exports of aluminium products grew during the first eight months of 2021 to record $502 million, compared to $335 million during the same period in 2020, a growth of about 50 per cent, according to a report by the Export Council for Building Materials and Metal Industries.
The report says that Egyptian aluminium exports increased by 50 per cent in August to reach $75 million, compared to $50 million in the same month last year. Egypt exported aluminium to 71 countries during the period from January to August 2021, the report said.
*A version of this article appears in print in the 21 October, 2021 edition of Al-Ahram Weekly