Aluminium - Trading, price factors, applications, production process

The element aluminium, in the periodic table symbolized with Al and atomic number 13, is one of the most common substances found in the earth’s crust. After oxygen (47%) and silicon (28%), Aluminium comprised about 8% of the soil and rocks of our planet. It is found only in chemical compounds with elements like oxygen, silicon and sulphur. From these, the pure metal aluminium can only be economically produced from the compound with oxygen.
Aluminium as a metal has countless of properties that make it very useful in a wide range of application. It is very strong for its weight, but easy to transform its shape. Aluminium forms its own barrier against corrosion and is not influenced by magnetism, but conducts electricity. It can cope very well with extreme cold without becoming brittle. As an important last note, aluminium can be recycled into new products with ease.
It is the most widely used non-ferrous metal with a production of around 32 million tons. Only iron is produced in larger quantities.


In ancient times, the Romans and Greeks used alumine salts for dyeing and dressing wounds. Even today, alum is used as an anti-hemorrhagic agent. Around 1808, the existence of the metal base of alum was identified, which was called aluminium. It was produced in 1825 in an impure form, but really isolated in pure form in 1827 by Friedrich Wöhler.

Pierre Berthier was the one who discovered that aluminium could be extracted from bauxite ore and ultimately led to a smelting process that made economical mass production of aluminium possible. The process, known as the Hall-Heroult process after its American and French inventors, was developed independently in 1886. It is still the primary method of aluminium production today.

In 1888 the Bayer process, developed by an Austrian chemist, aimed at refining aluminium ore contributed to the eventual mass production of aluminium.

The making of aluminium

The making of aluminium is a complex process which is comprised of a number of steps.


Bauxite ore is usually strip mined, because it is almost always found near the surface. Large producers of bauxite are Australia, with one-third of the production in the world, followed by Guinea, Brazil, China and India.


Production of aluminium for market use from bauxite ore is accomplished in two phases. First the bauxite ore is refined by the Bayer process to become aluminium oxide. Second, the aluminium oxide is melted in Hall-Heroult process to get pure aluminium.

Bayer process

In this process aluminium oxide is made from bauxite ore by following a number of steps.

First, the bauxite ore is crushed mechanically and mixed with caustic soda to be processed in a grinding mill which produces a slurry. The slurry, containing fine particles of ore, is put in a pressure cooker tank and heated to around 200 degrees Celsius (400 degrees Fahrenheit) under a pressure of 340 kiloPascal. In the course of several hours, the slurry transforms into a sodium aluminate solution.

The second step involves pumping the solution into a settling tank. Any impurities that did not dissolve in the pressure cooker tank settles to the bottom. This sediment is called “red mud” and consists mainly of iron oxide, fine sand and oxides of trace elements such as titanium. After the settling of the “red mud”, the remaining liquid  is pumped out through a series of filters to gather any unsettled impurities. The filtered solution is then washed to separate the caustic soda from the alumina.

The filtered solution is then pumped through a series of six-story-stall tanks, where crystals of alumina that is bonded to water are inserted through the tank. They grow in size when settling through the liquid as the dissolved alumina attaches itself to the crystals. The crystals are then removed and transferred to a kiln for calcining. At a temperature of 1100 degrees Celsius (2000 degrees Fahrenheit), the water molecules are removed from the crystals, leaving waterless alumina for the Hall-Heroult process.

Hall-Heroult process

The melting of alumina into the metal aluminium is realized in a vat called a reduction pot. This pot is coated with carbon on the bottom and acts as a electrode in the system. The other electrode is a set of rods made from carbon, which are suspended a little more than one inch above the ultimately accumulated aluminium on the floor of the reduction pot.

In the reduction pot, the alumina is dissolved in cryolite at 965 degrees Celsius (1770 degrees Fahrenheit) and forms an solution that conducts the direct current from the carbon rods to the carbon floor. The reaction on this current is that the bond between aluminium and oxygen is broken, which results in the forming of aluminium on the bottom and the escape of carbon dioxide at the top. The molten aluminium is siphoned off and held in a furnace to be cast into ingots, which is 99,8% pure.

A typical smelting plant has two or more potlines, consisting of dozens to hundreds of pots. Each potline can produce between 50,000 and 100,000 tons of aluminium per year. A pot will be operated in a continuous process, adding alumina and siphoning aluminium until maintenance requires it to be shutdown. Even the casting of aluminium ingots is a non-stop process, cutting one end of the mold, which has been cooled, while the other end is being cast. In a smelting plant, aluminium is produced 24 hours per day, 7 days per week.


Aluminium is an excellent metal when it comes to recycling. The scrap is only melted and separated from a slag to recover over 85% of the aluminium. Recycling the metal in this way only requires five percent of the original power input to produce it according to the Bayer and Hall-Heroult processes, making it very worthwhile. The slag can be refined to extract more of the metal, but is more energy-intensive.


Aluminium can be used in almost any application you can think of, but some of the more common uses are described below. It is usually alloyed with another metal, like zinc or copper to give it some distinct property that is needed.


Aluminium with a very high purity (99,999%) is used in electronics and CD’s, while normal aluminium is used for heatsinks and casings of processors and appliances.

Construction and transportation

Because of its light-weight and strength, it is used widely in construction and transportation as a lighter substitute of steel or cheaper substitute of carbon fibre. Doors, windows, siding and building wires can be made from aluminium.

In the transportation industry, bodies of cars, trucks, railway cars and airplanes are made from aluminium. When it is made into a thin sheet, it can be mechanically molded in any form.

Household items

Many ordinary items around the house are crafted from aluminium. Not only outer casings of all kinds of appliances, but also things like: baseball bats, cutlery, door handles, aluminium foil and cans.
Some countries have made coins containing a significant amount of aluminium, usually alloyed with copper.


The vast majority of alumina is converted into the metal aluminium, but around 10% is used for other applications. It can be used as an absorbant: it will remove water from hydrocarbons, enabling further processing. It also has value as a catalyst in producing sulfur.
Aluminium sulfate is mainly used in water treatment plants and the manufacturing of paper. It can also be used as a food additive, fire extinguisher and in leather tanning.
Aluminium chloride is used in the production of synthetic rubber and in petroleum refining.


Trading of aluminium takes place primarily on the London Metal Exchange (LME), similar to many of the other metals. Prices of this exchange are used as a benchmark for the pricing of contracts and their historical price curve can provide some insight into possible future prices.

Price Factors

Aluminum production requires a large amount of energy, hence the price of energy will have a direct impact on the final price of aluminum. Producers are also constantly improving their production techniques in order to improve the quality of aluminum as well as reduce the energy demand and consequently costs.

The demand for aluminum is steadily increasing over the years due to the many advantages it presents in the auto and construction industry. This increasing demand for aluminum will also continue to push up the price. Monitoring the expected demand is therefore a suitable indicator for the future price of aluminum.

LME Aluminum Futures Contract

An Aluminum Futures Contract on the London Metal Exchange (LME) has the following specifications:

Product Symbol AH
Contract Size 25 metric tons
Price Quotation U.S. Dollars and Cents per ton
Contract Months Monthly out to 63 months
Tick Size $0.25 per ton
Commodity trade and risk management
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