Aluminum Corporation of China (NYSE:ACH) shares were on fire this week, popping almost 24% on heavy volumes by Sept. 9 to hit 52-week highs before cooling off a bit. The stock was still up 18% this week as of 3 p.m. EDT Friday, thanks to an unexpected event that has rattled global aluminum markets.
So what
West African country Guinea has the world’s largest reserves of bauxite, which is the principal ore for aluminum. China, the world’s largest aluminum producer, sourced nearly half its bauxite requirement last year from Guinea.
Prices of aluminum have skyrocketed this year as demand soared even as supply concerns loomed large, especially after China cut down production as an anti-pollution measure. A freak fire in a refinery in Jamaica late August further exacerbated supply concerns. Roy Harvey, CEO of one of the world’s largest aluminum producers, Alcoa, reportedly even told The Wall Street Journal recently that “there’s just not enough metal inside of North America.”
Given the backdrop, a major political event in the world’s largest aluminum feedstock suppliers was bound to send the aluminum industry into a tizzy.
