Aluminum

Aluminum, symbol Al, is a silvery, lightweight metal that is the most abundant metallic element in the earth’s crust. Aluminum was first isolated in 1825 by a Danish chemist, Hans Christian Oersted, using a chemical process involving a potassium amalgam. A German chemist, Friedrich Woehler, improved Oersted’s process by using metallic potassium in 1827. He was the first to show aluminum’s lightness. In France, Henri Sainte-Claire Deville isolated the metal by reducing aluminum chloride with sodium and established a large-scale experimental plant in 1854. He displayed pure aluminum at the Paris Exposition of 1855.

In 1886, Charles Martin Hall in the US and Paul L.T. Heroult in France simultaneously discovered the first practical method for producing aluminum through electrolytic reduction. The low-cost Hall-Heroult process is still the major method used for the commercial production of aluminum today.

By volume, aluminum weighs less than one-third as much as steel. This high strength-to-weight ratio makes aluminum a good choice for construction of aircraft, railroad cars, and automobiles. Aluminum is used in cooking utensils and the pistons of internal-combustion engines because of its high heat conductivity. Aluminum foil, siding, and storm windows make excellent insulators. Because it absorbs relatively few neutrons, aluminum is used in low-temperature nuclear reactors. Aluminum is also useful in boat hulls and various marine devices due to its resistance to corrosion in salt water. There were 23 primary aluminum reduction plants in the US as of 2001, operated by 12 different companies.

Aluminum futures and options are traded on the New York Mercantile Exchange (NYMEX) and the London Metal Exchange. Aluminum futures are traded on the Tokyo Commodity Exchange (TOCOM), the Osaka Mercantile Exchange (OME), and the Shanghai Futures Exchange (SHFE). The NYMEX aluminum futures contract calls for the delivery of 44,000 pounds of aluminum and the contract is priced in terms of cents per pound.

Prices – NYMEX aluminum prices in 2003 staged a very sharp rally in the latter half of 2003 due to the sharp upward rebound in US economic activity and to the weak dollar. Aluminum futures closed 2003 at 74.6 cents per pound, up 16.6% from the 2002 close of 63.95 cents. The 2003 close of 74.6 cents was only mildly below the contract high of 76.95 cents posted in September 2000 before the 2000-03 economic slump began in earnest.

Supply – World production of aluminum rose 6.6% in 2002, the latest reporting year for the data series, to a record high of 25.900 million metric tons, up from 24.300 million in 2001. The world’s largest producers of aluminum are China with 16.6% of world production, Russia (12.9%), US (10.5%), Canada (10.5%), and Australia (7.1%). US production of aluminum in 2003 was on track to rise slightly to 2.7 million metric tons, up from 2.707 million in 2002 but still well below the high near 4 million seen in the early 1990s. The US produced 2.930 million metric tons of aluminum from scrap in 2002, more than the 2.707 million metric tons produced from mined ore.

Demand – US consumption of aluminum in 2002 rose to 6.310 million metric tons from 6.230 million in 2001, although the 2001-2002 levels were depressed from the previous several years due to weak US economic growth.

Trade – US imports of aluminum in 2002 rose to 4.060 million metric tons from 3.740 million in 2001. US imports in 2002 rose slightly to 1.320 million metric tons from 1.300 million in 2001.