Hold That Tesla! Inflation Will Be Made of Aluminum
The metal used to be dirt cheap. No longer. It’s going to affect everything from government policy to the price of groceries.
No longer dirt cheap: Bauxite ore
Photographer: Dhiraj Singh/BloombergAluminum is the jack-of-all-trades of the metal industry: it’s everywhere, underpinning modern life, from an iPhone to a jetliner to a can of beer. For a long time, however, it was difficult to get excited about it. The metal is just dirt: bauxite, one of the most abundant elements on the Earth’s crust. And the bulls couldn’t count on prices getting a boost if China ran short on it — as the country did with almost all other commodities — because the People’s Republic produced lots of aluminum, too.
The industry joke was that to make money in aluminum, one should sell into any price rally. Not anymore. The fight against climate change — with its rush for the light metal coupled with the shutdown of the dirty power sources that helped produce it — has turned the trade upside down. It’s crippling supply, particularly in China. The result is the hottest aluminum market in 30 years.