Discover the city in China that causes the price of aluminum to rise

The confinement caused by Covid-19 in the Chinese city of Baise, relatively unknown, but crucial for the world production of aluminum, resulted in the soaring of the price of the metal.

The price of aluminum reached on Tuesday (8) the highest value since 2008, at US$ 3,236 (R$ 17,000) a ton, close to the all-time high (US$ 3,380.15, R$ 17,800), in a context of fears about world supply.

Baise’s weight

Located 100 km from the border with Vietnam, Baise is called the “aluminium capital of southern China”.

It produces 2.2 million tons per year and guarantees 80% of the capacity of Guangxi, a region rich in resources on which it depends.

Guangxi is China’s main aluminum exporting region, with around 500,000 tonnes per month.

China is the world’s largest producer of aluminum, an essential element for many industries, from coffee pods to aircraft.

city ​​situation

Since Monday (7) the 3.5 million inhabitants have been prevented from leaving the city and many are in strict confinement, after the detection of cases of Covid-19.

Although the number may seem insignificant — less than 200 — compared to other regions of the world, in China it is considered important.

Since the beginning of the epidemic, the country has applied a “Covid zero” strategy. A single case in a city can trigger lockdowns, travel bans and large-scale testing to detect the virus.

The method has allowed China to return to a near-normal life since the second quarter of 2020, but the restrictions significantly affect activities.

Consequences

Baise’s confinement raises concerns about aluminum supply – world chains are already operating at the limit due to restrictions in the world due to the pandemic.

A local federation guarantees that aluminum production is practically at its normal level. But the transport of raw materials is severely hampered due to restrictions on travel.

A large industrial park in Baise, which includes several factories, was closed.

On Wednesday (9), some units managed to resume production, but not all.

One of the main ones, Huayin Aluminum, reduced production capacity by 1.2 million tons due to logistical problems, according to the specialized website Antaike.

Other factors?

The calendar doesn’t make things easy.

After a week of holidays in China for the Lunar New Year, which ended on Monday (7), aluminum reserves were not replenished.

The recess had already caused prices to rise, at a time when factories were stopped despite strong world demand.

Geopolitical tensions between Russia and Ukraine are also fueling the rise in prices.

“In fact, the production of aluminum requires a lot of energy, fundamentally gas”, explains to AFP the analyst Fiona Cincotta, from City Index.

Russia is among the largest aluminum producers, alongside China.