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 323 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 177 workers and generates about $128.5 million annually.

    • The aluminum production industry consists of about 323 companies that employ 57,300 workers and generate $41.5 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

                                May 18, 2024 - Prices Falling Amid Weak Demand
                                • Producer prices for alumina and aluminum production and processing fell 7.3% in March compared to a year ago after falling 14.6% in the previous annual comparison, according to the latest US Bureau of Labor Statistics data. Prices have fallen due to declining demand for aluminum in North America and globally. Aluminum production employment was relatively unchanged in March (up less than 1%) year over year, while average wages at primary metals manufacturers rose 3.5% over the same period to $28.64 per hour, according to the BLS.
                                • The closure of one of the US’s last primary aluminum smelters in late January is sparking fears of an aluminum shortage in the US, Steel News reports. The shutdown of the Magnitude 7 Metals plant in Missouri, which was capable of supplying up to 30% of the nation’s aluminum needs, was the third closure of a US aluminum plant in less than two years, leaving the US with just four. The surprise closure threatens the US’s clean energy transition because aluminum is used in everything from airplanes and cars to solar panels and electric transmission lines. The Mag 7 plant closure highlights one of the major challenges facing the aluminum industry: high electricity costs, as smelting requires near-constant electricity at high volumes. Appeals have been made to the Biden administration to restart the plant as a matter of national security.
                                • 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.
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