Will China’s 20% aluminum output reduction cause a shortage of Coca-Cola cans and fire-resistant wrap in the US?

Karen Madej

In July 2020, according to USA Today, despite plenty of aluminum, can producers were unable to meet production requirements. Loyal Coca-Cola customers, unable to buy their soda in the shuttered venues they visited pre-pandemic, increased their consumption at home.

As the soft drink favorite increased sales in the at-home market, the price of a Coca-Cola share on February 21, 2020, reached a high of $60.31. By March 20, 2020, it had fallen to $38.30. Sales were down because of all the closed restaurants, theme parks, and other away from home venues. December 31, the share price had climbed to $54.84. 

Reduction in output

China’s output went down for the 4th month in a row in August 2021. This caused the price per tonne to reach a high of $2,900. Almost the highest since July 2008. Trading Economics has concerns high demand for aluminum may not be met.

A ferocious rebound in aluminum demand — up 18% in the first five months of this year, according to the Aluminum Association — has left the U.S. market short of metal. Andy Home, Reuters

According to Reuters, Consultancy Mysteel said that eight aluminum smelting companies in Guangxi, China, will have to keep their September production at a maximum of 80% of average monthly output in the first half of next year.

The concern over China reducing its aluminum output to conserve energy and a massive increase in worldwide demand may cause a drop in revenue for companies who use the metal. However, Trading Economics predicts a fall in the price of aluminum, which has already started. 

Coca-cola also announced the testing phase of their plant bottle made of paper. It will decompose after a year. It’s been in the making for many years.

Coke and Nestle said it is hard to get the plastic they need from recycled sources; Nestle said it often pays a premium for recycled material. Joe Brock Reuters 10/2020

On one hand, concern over China reducing its aluminum output to conserve energy and a massive increase in worldwide demand may cause a drop in revenue for companies who use the metal. On the other hand, Trading Economics predicts a fall in the price of aluminum, which has already started. This may be short-lived as China starts reducing the use of coal in home heating systems also used for smelting to produce aluminum for the winter months when pollution is at its worst.

Aluminum is vital to Americans

But the reduction in aluminum production could also curb the likes of Mike Diky buying expensive fire-resistant material, the same foil used by wildfire fighters, and to wrap around the world’s largest ancient sequoia tree. If the foil can protect people, property, and a tree from 550 degrees Celcius heat while wildfire passes by — and it has proven successful for Mike Diky and others — then it’s very likely demand for aluminum will go up even higher.

Fortunately, America’s saving grace where aluminum is concerned was the decision to impose a 10% import tariff in 2018 under Section 232. An EPI (Economic Policy Institute) study released on May 25th, 2021, announced the benefits. Increased employment and production and capital investment. 

Between March 2018 to February 2020, U.S. production of primary aluminum increased by 37.6% compared with the previous two-year period. Plus, domestic producers of both primary aluminum and downstream aluminum products have made commitments to create thousands of jobs and invest billions of dollars in aluminum production.

According to IAI (International Aluminium Institute) data released January 20, 2021, the U.S. output rose by 4.4% from 2019 levels.

This article contains information, not advice or recommendations. Carry out your own independent verification of facts and data.

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Passionate about climate change and living a debt-free, sustainable life. Determined to learn how to and build an adobe house or Earthship. The goal is to live off-grid and off the land. Energy for heat and to power electrical devices and appliances will use solar, wind, and hydro-powered electricity. No trees will die to make my home.

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