Aluminum Industry: Resilience Amidst Pressures and New Challenges

The Brazilian aluminum industry is showing signs of recovery amid significant challenges that threaten its global competitiveness. After a tumultuous period marked by high energy costs and increased Chinese imports, production reached 1.1 million tons last year, the highest level in the past twelve years. However, this recovery lags behind the peak of the early 2000s, when output hit 1.6 million tons. The vertical integration of the supply chain and robust demand for aluminum in the electric sector are key factors sustaining industry activity. Nevertheless, high energy costs continue to be a critical issue. Janaina Donas, executive president of the Brazilian Aluminum Association (Abal), reiterates the urgency of resolving the paradox of having abundant clean energy but facing one of the highest energy tariffs globally. Another emerging challenge is the conflict in the Middle East, which directly affects local and global aluminum production. Bombardments on industrial plants have reduced capacity and impacted market access. The importation of alumina, a critical input for refining the metal, has been compromised by the Strait of Hormuz, where operations were halted, with estimates suggesting a 40% reduction in Gulf production. These complex challenges encompass both internal and external issues, impacting the industry's competitiveness and its relations with global markets. Source: Valor Econômico