AI data centers – massive demand for aluminum is crushing the US aluminum industry
The boom in metal-intensive technologies like data centers and electric vehicles has made it a prime time to be in the US aluminum business.
Prices are booming. Part of that is because inside every data center are cooling units, server racks, radiators, and a litany of other pieces and parts made out of aluminum.
No wonder demand is high.
But data centers guzzle enormous amounts of power, and electricity prices are skyrocketing. In the US alone, electricity demand is expected to grow five to 10 times faster over the next 10 years than it did in the previous decade, per Bank of America.
For aluminum smelters, this is a problem. Producing aluminum is incredibly energy-intensive, and without cheap power, those smelters can’t operate.
If power weren’t enough of a problem, the sector is also facing pressure from overseas, where international competitors are boosting supply. Indonesia, already a major global supplier of bauxite, is steadily increasing its production of processed aluminum as it seeks to become a powerhouse, per Jefferies. China, the world’s largest producer of aluminum several times over, is doing the same.
The US aluminum sector, which is nearly dormant after years of shuttering smelters, is now attempting to build out more capacity as demand is racing upward. And that demand — from data centers to power transmission equipment — has supported stock prices. For example, shares of Alcoa Corporation (AA) and Century Aluminum Company (CENX), which operate the only domestic aluminum smelters left in the US, have both recovered from the April tariff market shock to post gains so far this year.
said Charles Johnson, the president and CEO of the Aluminum Association trade group.
Charles Johnson, the president and CEO of the Aluminum Association trade group, said:
In a world in which we are more energy intensive … it’s going to be built with aluminum,
But just as Big Tech’s data center boom is sparking new demand for the metal, the industry’s insatiable desire for power — and its willingness to pay above market for it — is hampering any domestic build-out of smelting capacity and cutting into supply available for the AI arms race.
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AI data centers – massive demand for aluminum is crushing the US aluminum industry, source
