Introduction to Aluminum Commodities - dummies

Introduction to Aluminum Commodities

By Amine Bouchentouf

Aluminum is one of the most ubiquitous commodity metals of modern society. Not just aluminum soda cans account for its widespread use — aluminum is also used in transportation (cars, trucks, trains, and airplanes), construction, and electrical power lines, to name just a few end uses. As a matter of fact, aluminum is the second most widely used metal in the world, right after steel.

Because of its indispensability, you need to make room to include this metal in your portfolio.

Aluminum is generally measured in metric tons (MT).

Aluminum is a lightweight metal that’s resistant to corrosion. Because of these characteristics, it’s widely used to create a number of products, from cars to jets. Consider a few items made out of aluminum:

  • Construction: Aluminum has industrial uses as well, including a role in the construction of buildings, oil pipelines, and even bridges. Building constructors are attracted to it because it’s lightweight, durable, and sturdy.

  • Packaging: Almost a quarter of aluminum is used to create aluminum wrap and foil, along with beverage cans and rivets.

  • Transportation: Aluminum is used to create the body, axles, and, in some cases, engines of cars. In addition, large commercial aircrafts are built using aluminum because of its light weight and sturdiness.

    Industry Aluminum Consumption (Percentage of Total)
    Transportation 26%
    Packaging 22%
    Construction 22%
    Electrical 8%
    Machinery 8%
    Consumer goods 7%
    Miscellaneous uses 7%

Source: London Metal Exchange (LME)

If you’re interested in finding out more about the aluminum industry, check out the following organizations: