At under $1,500 per tonne, aluminium cash prices on the London Metal Exchange are at levels last seen in 2015 and not far shy of the lows seen during the 2008-09 financial crisis. Estimates are that as much as half the world’s smelters are now under water, meaning cuts and/or closures are inevitable.
For an industry that has been hit by trade tariffs, structural oversupply and now rapidly deteriorating demand in key consuming industries like automotive and aerospace, it’s likely to be survival of the fittest going forward.
While that ought to mean producers with low-cost energy and raw materials inputs will do better, that isn’t always the case.
Take Iceland, for example. Blessed with access to renewable energy through its reservoirs, rivers and lakes, the country has been a magnet for aluminium smelters for decades. You’ve got to be able to make money smelting...