Aluminum Production

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 350 aluminum processors in the US produce aluminum and aluminum alloys from bauxite and aluminum scrap. Products include aluminum ingots, slabs, sheets, plates, foils, bars, and extruded shapes. Primary production is the process in which alumina (aluminum oxide) is smelted to create pure aluminum metal. Secondary production is the smelting of recycled aluminum scrap to create aluminum that can be used again.

Volatile Product Prices

Aluminum prices vary with global supply and demand and can be volatile.

High Energy Consumption

Aluminum production consumes high amounts of electricity, natural gas, and fuel oil.

Industry size & Structure

The average aluminum producer employs about 172 workers and generates about $242 million annually.

    • The aluminum production industry consists of about 350 companies that employ 58,400 workers and generate $84.7 billion annually.
    • The 36 primary aluminum producers in the US are dominated by two companies, Alcoa and Century Aluminum.
    • There about 60 secondary aluminum production facilities in the US.
    • About 65 companies produce aluminum products, such as sheets, plates, bars, foils, and extruded shapes.
                                Industry Forecast
                                Aluminum Production Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Mar 18, 2024 - Payrolls Rose as Prices Fell in 2023
                                • Employment by aluminum producers grew 2.8% in December compared to a year ago after rising 3.8% in the previous annual comparison, according to the US Bureau of Labor Statistics. Meanwhile, average wages at primary metals manufacturing firms climbed to $29.09 per hour in December, a new high and 6.7% year-over-year change, BLS wage data shows. Payrolls are rising for aluminum producers amid a sharp decline in producer prices, which have been trending downward from their peak in April of 2022 as supply has exceeded demand.
                                • Legislation introduced in Congress in January would hold aluminum producers accountable for charging a tariffed price on non-tariffed metal, according to a press release from the office of its sponsor Rep. Ken Buck of Colorado. The False Claims Enhancement Act (H.R. 7078) clarifies that it is a violation of the False Claims Act for a party – such as an aluminum producer – to falsely charge a tariff in a private contract where no tariff is owed and the proceeds are not paid to the government. The bill is supported by the beer industry – a major consumer of aluminum – which says it would provide much-needed transparency in aluminum pricing. “Aluminum is the single largest commodity cost across the beer industry, making it imperative to have fair and open price discovery processes for buyers and sellers alike,” Molson Coors President and CEO, Gavin Hattersley said in a statement.
                                • Demand for aluminum in the US and Canada fell 4.4% through the first three quarters of 2023, preliminary estimates released in January by the Aluminum Association show. North American demand for aluminum (shipments by domestic producers plus imports) totaled about 20 billion pounds in the first three quarters of 2023 compared to 20.9 billion pounds for the same period in 2022. Notably, electrical wire and cable saw 14.7% year-over-year demand growth as the electrical infrastructure market remained strong. In total, semi-fabricated (aka “mill”) product demand fell 9.5% year-over-year through the third quarter. Aluminum exports increased 23.1% in Q3. “Despite some softness in the market following near-record shipments in 2022, aluminum demand remains near the 10-year average during a time of increased investment for the US industry,” said Charles Johnson, CEO of the Aluminum Association.
                                • Smelting activity in the US has declined dramatically, according to a recent report from SAFE Foundation. In 2021, the US ranked ninth (behind Norway), accounting for just 1.3% of global smelter production, according to data from the US Geological Survey. By comparison, China accounted for 57.4%. The lack of domestic smelting capacity leaves the nation at risk of being unable to access a secure supply of aluminum, according to the SAFE report. Without action on domestic primary aluminum production, the US risks a much larger reliance on the UAE, Russia, and China for critical infrastructures, military needs, and clean technologies, says the SAFE report. The biggest obstacle to increasing domestic production is the cost of energy.
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