Aluminum - How to invest in aluminum? [Guide]

Aluminum is, in other words, aluminum of very high purity. It is the third most abundant element in the earth's crust. This raw material has a number of industrial applications, but it is also a raw material in which we can invest. What are our investment options in aluminum?

Graph - aluminum

The use of aluminum

Aluminum is a light and very durable element. Its strength increases at low temperatures, and its great advantage is that it can be recycled multiple times without damaging its structure. Aluminum is characterized by very high plasticity, high thermal and electrical conductivity and protective properties against X-rays.

Aerospace industry

Harder alloys of this raw material are used in construction elements of spacecraft and airplanes.

Food industry

Aluminum cans are widely used in the food industry. We can find canned food, carbonated drinks and beer in them. Aluminum foil and factory food packaging containing this foil are also popular products.

Electronic equipment and household appliances

Aluminum alloys are used in electronic equipment and in household appliances, such as washing machines and refrigerators.

Automotive industry

Rims and body parts, and even the entire body of cars such as Audi A2, Audi A6 or Audi A8 are made of aluminum due to its anti-corrosive properties.

Construction and electrics

Aluminum is widely used in construction and it is used in electric cables due to its excellent conductivity of energy.

Manufacture of aluminum

Nowadays, the title material is obtained from bauxite and by recycling. Bauxite is a red-colored sedimentary rock that occurs mainly in hot climates. Bauxite ore is mined from the mine. Then they are crushed to the consistency of sand and the aluminum oxide is extracted from it. The next step is heating to 240 ° C under pressure, hydrolysis and then calcination to obtain aluminum oxide. Aluminum is obtained from alumina by a process Hall-Heroult.

Aluminum producing countries

China is the largest producer and consumer of aluminum in the world. China is responsible for more than half of the world's supply of this raw material. Other important producers are India, Russia, Canada and India. Annual world production is estimated at 60 million tons.

The largest producers of aluminum

Factors influencing the formation of prices

Aluminum prices as well copper pricesare considered a good indicator of the overall health of the world economy. This is due to the fact that both metals are widely used in many industries. Below, we present the most important factors that affect the prices of this raw material.

The economy of China

As China is responsible for 40% of global aluminum consumption, the demand for this raw material in the Middle Kingdom has the greatest impact on the prices of aluminum in the markets. If China's economic power continues to grow, aluminum prices should remain high or rise.

Technology development in the transport sector

Currently, the main application is in the construction of airplanes, cars and spacecraft. Striving to reduce the weight of means of transport generates demand for aluminum. On the other hand, the development of alternative raw materials such as carbon fiber may lower the demand for aluminum and affect prices.

Costs of energy resources

Production is very energy-intensive, making the price of this raw material very susceptible to changes in energy prices and oil.

How to invest in aluminum

Futures contracts

On the COMEX exchange, which is part of NYMEX (New York Mercantile Exchange), we can find futures with the designation AL. In the case of the London Stock Exchange LME (London Mercantile Exchange), the contract designation is AH.

1 futures contract is for 25 tons.

CFD

A simple method of speculating on the price of aluminum is contracts for difference in price (CFD) offered by Forex brokers. CFDs allow you to bet on price movement without physically owning this metal, stocks or financial instruments such as ETFs. CFDs are leveraged, the leverage on raw materials, including aluminum, is usually 1:10 (10%).

How to invest in aluminum - CFD Brokers

Below is a list of offers from selected brokers offering favorable conditions for trading on aluminum (CFD).

Broker
End	Poland	Cyprus	Denmark
Aluminum symbol	ALUMINIUM	ALUMINIUM	ALUMINIUM
Min. Deposit	PLN 0 (recommended min. PLN 2000 or USD 500, EUR)	200 USD	0 PLN / 0 EUR / 0 USD
Min. Lot value	price * 50 USD	2000 USD (10% security required)	b / d
Commission	-	-	-
Platform	xStation	eToro platform	SaxoTrader Pro Saxo Trader Go
	REVIEW	REVIEW	REVIEW
	CREATE AN ACCOUNT	CREATE AN ACCOUNT	CREATE AN ACCOUNT

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. From 72% to 89% of retail investor accounts record monetary losses as a result of trading CFDs. Think about whether you understand how CFDs work and whether you can afford the high risk of losing your money.

ETF

On the market ETFs we find one instrument that gives us a clean exposure to aluminum prices. It is iPath Dow Jones-UBS Aluminum ETN.

[JJU] iPath Dow Jones-UBS Aluminum ETN

• • Issuer: Barclays Capital
  • Annual fees: 0.45%

JJU manages assets worth 3.8 million dollars. The fund only buys futures for that single commodity and rolls them over to the next month when they expire.