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 366 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.

High Energy Consumption

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

Volatile Product Prices

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

Industry size & Structure

The average aluminum producer employs about 155 workers and generates about $105 million annually.

    • The aluminum production industry consists of about 366 companies that employ 56,900 workers and generate $38 billion annually.
    • The 36 primary aluminum producers in the US are dominated by two companies, Alcoa and Century Aluminum.
    • There about 90 secondary aluminum production facilities in the US.
    • About 137 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

                                Nov 14, 2022 - No LME Ban on Russian Aluminum
                                • The London Metals Exchange (LME) in November said it will not ban Russian aluminum and other metals because enough companies will still accept it in 2023 to prevent flooding the exchange’s storage sheds and dragging down prices, The Wall Street Journal reports. In late September, the LME – whose prices are considered the standard global prices for base metals – announced it was considering banning aluminum produced in Russia, a move that could have harmed Russia’s huge aluminum industry and created problems for international supply chains. The exchange feared that self-sanctioning by metal-consuming companies – including automakers – risked an influx of Russian aluminum into its warehouses, which could depress prices and erode confidence in the exchange. The news came as a blow to big aluminum producers in the West and some traders who had lobbied the LME to take action to ban Russian metals, Reuters reported.
                                • Tariffs on aluminum have cost the US beverage industry $1.7 billion over the past four-and-a-half years, according to new market research from HARBOR Aluminum. Since the implementation of Section 232 aluminum tariffs in March 2018, thru August 2022 the US beverage industry paid $1.714 billion on 8.203 million metric tons of aluminum, only $120 million (7%) of which went to the US Treasury. US rolling mills and smelters, as well as Canadian smelters collected the rest (93%) of the total by charging end-users – including US brewers – a tariff-laden price regardless of whether the metal was meant to be tariffed based on its content or origin. The beverage industry is urging the Biden Administration to provide relief from the tariffs, saying the duties reverberate throughout the supply chain, raising production costs for aluminum end-users and ultimately impacting consumer prices.
                                • To supply the growing market for beverage cans, aluminum producer Novelis in October 2022 broke ground on the largest aluminum-rolling plant in the US built in nearly 40 years. The $2.5 billion recycling and rolling plant in Alabama is expected to have an initial 600 kilotons of finished aluminum goods capacity per year focused on the beverage container market, with flexibility for automotive production, the company said in a press release. It also adds a new recycling center for beverage cans, increasing Novelis's recycling capacity by 15 billion cans per year when fully operational. While the US market for cans was mostly flat between 2010 and 2018, demand for beverage cans has rebounded as the beverage industry seeks to reduce reliance on plastic containers amid consumer concerns about waste. Nearly all (99%) beer cans and 97% of all soft drink cans are made of aluminum.
                                • The Aluminum Association’s latest monthly Situation Report indicates the industry is on pace to approach record demand levels. Driven by strong growth in the containers and packaging segments, preliminary estimates show aluminum demand in the United States and Canada (shipments by domestic producers plus imports) totaled an estimated 14.1 billion pounds through June, an increase of 6.6% over the same period in 2021. Strong growth in the first half followed a near 8% year-over-year increase estimated in 2021 and built on domestic demand levels estimated during the first quarter. Nearly all major semi-fabricated – or “mill” – product categories saw increased year-over-year demand growth in the first half, led by sheet and plate products (up 12.5%) and electrical wire and cable (9.2%). In total, mill product demand grew 9.1% year-over-year through June 2022.
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