Aluminum prices soar as supply risks increase
As the demand for aluminum rises, so does its price, shown by the fact that it has soared to $3,000 a ton for the first time in 13 years. The energy-intensive metal’s price has risen by around two-thirds over the past year, with the recent surge of 14% down to various problems arising in Guinea, China and beyond.
Guinea is a main producer of bauxite, the main ore source of aluminum, which is often processed in China. The recent coup in Guinea poses a risk for the industry as tensions could generate logistical bottlenecks. China is also facing challenges, as production curbs are being imposed by the province of Yunnan on smelters to meet energy intensity reduction goals. Smelters in the EU are also facing rising costs across the industry.
Limited supplies of the metal are set to cause issues for the rest of 2021 and for most of 2022, according to participants at the Harbor Aluminum Summit in Chicago. The UK and the US have already reported a shortage of aluminum cans, with more disruption set to unfold.
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UPS warns that the latest supply chain crisis will cause lasting damage
According to a top executive at UPS, one of the world’s largest delivery companies, the supply chain crisis caused by Covid-19 will inflict long-term damage on the globalization driven by multinationals. Since the pandemic began, global supply chains have faced swings in demand as well as disruptions to airline and shipping industries across the world.
Scott Price, president of UPS International, has said that multinationals are making a “big push” towards regionalizing their supply chains to avoid further challenges. According to Price, one of the reasons supply chain regionalization accelerated is because companies “were surprised how little optionality existed during this period.”
UPS is set to maintain its strong levels of profitability, but not every firm is in this position, as the range of industries affected by the recent events is growing. Industry experts predict that it could be 2025 until we see long-distance air travel back to pre-pandemic levels, and for now, issues with sourcing key supplies will remain.
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Economic costs pile up as border closures are extended
The delta variant of Covid-19 is causing further problems across the globe as companies are being forced to delay investments and cut jobs because of the strict travel restrictions, especially in Asia. Countries including China, Australia and Japan are still blocking their borders or require quarantine upon entry, making firms rethink their overseas strategies.
Travelers to China require special government approval to enter the country, with mandatory quarantine for up to 28 days being imposed in some cities. This has had a huge impact on the movement of workers, with companies delaying or even eliminating projects altogether. Australia’s higher education and Singapore’s construction industry have also been affected by the border closures. Most of Asia is also affected by the lack of tourism and problems with shipping, both proving to be costly.
Many companies have found temporary solutions to work around the border restrictions, such as video conferencing and utilizing alternative methods for sending and receiving overseas goods. However, it is safe to say that people across the continent have a big task ahead of them to return to pre-pandemic ways when it is deemed safe to do so.
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