InvestorQ : Can I also trade aluminium as a base metal in the commodity markets?
vani Patil made post

Can I also trade aluminium as a base metal in the commodity markets?

Anu Biswas answered.
3 years ago

Globally, aluminium is the second most consumed metal after steel and has a variety of industrial applications. From aluminium foil to keep your food warm to electrical appliances like refrigerators to cars and aircraft, aluminium has applications in a wide variety of industries. In case of aluminium, the major issue is not of supply as the crude form of aluminium is available to the extent of 8% of the earth’s crust. The big challenge in aluminium is that the manufacturing process is extremely power intensive. In fact, the power cost accounts for over 10% of the cost structure of an aluminium manufacturer. Like in case of most metals, China accounts for over 50% of the global demand for aluminium and therefore any alpha in terms of incremental demand for aluminium has to necessarily come from China.

The big story on aluminium is about the shifts in per-capita consumption of aluminium. The global average per-capita consumption of aluminium is 80 KG. However, the distribution is quite skewed. While countries like the US and Western Europe have per capita consumption of nearly 350 KG, in case of countries like India, the per capita consumption of aluminium is as low as 25-30 KG. That is why there is a huge opportunity for aluminium demand to pick up in countries like India. One of the major qualities of aluminium is that it is very light and also has anti-corrosive properties. Hence, aluminium has a big role to play in critical engine parts where corrosion needs to be avoided.