Aluminum production falls 50% since 2015

The production of primary aluminum in the United States has declined by more than 50% since January 2015, according to the U.S. Energy Information Administration. Primary aluminum production was consistently about 140,000 metric tons per month until mid-2015, but since April 2016, it has averaged about 60,000 metric tons per month, even as aluminum prices have started to rise.

Initially, the decline was attributed to decreasing aluminum prices, but the price of aluminum has almost returned to early 2015 levels. And other factors including rising electricity prices, higher labor costs and the strength of the U.S. dollar have contributed to the fall. Also, aluminum is more price sensitive than secondary aluminum production, including recycling.

Aluminum production requires about 45,000 British thermal units per pound of production, and is the most energy-intensive major product produced in the United States, according to the U.S. Department of Energy’s Advanced Manufacturing Office. The production of paper and paperboard products is second most energy-intensive industry and uses about 16,000 British thermal units per pound of production.

“The downturn in domestic primary aluminum production is unlikely to reverse in the near future,” according to the EIA. “The high number of domestic plant curtailments in the previous five years likely indicates that aluminum production firms do not believe the market is going to return to profitable conditions soon.”

Imports of aluminum have risen as exports have remained flat since 2015. Most U.S. imports of aluminum come from Canada, Russia and the United Arab Emirates.

Supplies of aluminum have been flat or slightly above early 2015 levels. Secondary aluminum production has been flat, and the rise in imports has made up for the loss of primary production. “Secondary aluminum can be used for most applications that require aluminum,” according to the EIA. Production of secondary aluminum uses only 6% of the energy required to produce primary aluminum. Also, aluminum doesn’t degrade as it’s recycled and reprocessed.