“Aluminum crisis is disrupting the U.S. auto industry,” the U.S. “Wall Street Journal” sounded the alarm on the 4th. It is not just the US media that have focused on the issue. Detroit carmakers have warned of soaring costs as war in the Middle East continues to strain supply chains for raw materials including aluminium, the Financial Times reported. The financial cost of higher commodity prices is expected to climb to $5bn this year, close to the $6bn cost of higher us tariffs.
An aluminum plant in Tennessee
LME aluminium prices are reported to have risen 16 per cent since the US and Israel launched their military strike on Iran. Jpmorgan analysts warned in mid-april that the global aluminium market could be in a supply“Black hole”-a“Severe, chronic and structural undersupply situation”, it could be the most severe in the past 25 years.
Meanwhile, the impact on the US aluminium market is particularly acute. With the US highly dependent on imports for its aluminium supplies, about a fifth of that comes from the volatile Gulf region. In the context of supply-side disruptions, combined with the US government’s policy of imposing tariffs on imported aluminium, domestic aluminium prices rose sharply and rapidly. International aluminium prices are about $3,500 a tonne, while US prices have surged to $6,100 a tonne, up about 90 per cent from the same period last year.
Aluminium is lighter than steel without sacrificing structural strength. In recent years, aluminium, an important material used in car bodies, doors and engines, has become a key commodity for carmakers seeking to improve fuel economy and vehicle fuel efficiency. The North n auto industry consumed 3.7 million tons of aluminum last year, up more than 30 percent from 2020, according to the data.
The volatile price of aluminum has left U.S. automakers, which rely on the raw material, in a bind. GM said higher commodity prices could cut adjusted operating profit this year by $2bn. Strantis, the multinational car company, predicted that the negative impact of higher raw material costs could reach $1.2 billion for the full year.
Ford, the largest buyer of aluminum among the big three U. S. automakers, has been the hardest hit by the price increases. Concerned about fuel economy, in 2014, Ford’s best-selling U. S. model F-150 body material from steel to aluminum. While the move has helped make vehicles lighter, it has made Ford one of the most aluminium-dependent companies in the industry and puts it at far greater risk than its peers in the current supply crunch. Ford executives said on an earnings call this past week that the company had doubled its forecast for commodities costs this year from $1bn to $2bn.
Industry insiders told the financial times that if the -ISRAEL conflict continues for another two months, more auto industry suppliers will demand higher prices for new contracts, in about six months, the higher cost will be reflected in the market price, and automakers will have to cut discounts or raise prices outright. But the automobile dealer indicated that after the epidemic, the automobile cost rises, the consumer economy pressure was already very big, the future complete vehicle raises the price the space to be afraid not big.