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Bank of America commodity strategist Michael Widmer, said that the global aluminum industry’s effort in decarbonization is likely to curb large-scale investment in new smelting capacity in the next few years as the demand for renewable energy will lead to an increase in capital costs.

China in particular will face the problem. Therefore, the aluminum market will remain tight and encounter price increases in the next two to three years at least.

China’s government has seen the impact of high expenses to deal with climate changes, so it restricted the domestic production capacity to the maximum of 45 million tons per year in order to curb emissions.

Besides the uncertainty of carbon emissions and trade restrictions, smelters have been reluctant to announce new projects.