The Top 8 Aluminum Stocks To Consider in 2022 as Prices Soar

Aluminum market fundamentals are the strongest they’ve ever been, and aluminum stocks have rallied over the past year. Although some of the strength is due to China’s supply constraints, longer-term, the shift to EVs will continue to boost demand for this lightweight metal. Low-carbon aluminum is also a possibility. Learn how you can invest.

SustainFi   Updated February 14th, 2022

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Is aluminum a good investment?

The shift to electric vehicles, which are now over 20% of new car sales in China, creates more demand for aluminum. Aluminum producers like Alcoa and Norsk Hydro and component makers like Constellium are set to benefit from the growing share of electric cars.

A light-weight metal, aluminum keeps electric cars light, ensuring the battery lasts longer. Despite being more expensive than steel, the much lighter metal is becoming the preferred choice for EV components, such as battery housing. According to one estimate, an EV needs 30% more aluminum than a gasoline-powered car.

Lighter cars can need smaller batteries and can travel a longer distance on the same charge. Aluminum has good thermal management properties and can also be used in EV chargers. It even makes up 8% of solar panels by weight. And it can be recycled.

Although aluminum the element is abundant, turning it into a usable metal requires multiple steps. First, bauxite, a raw material, is refined to produce alumina, a compound of aluminum and oxygen. Second, alumina, an intermediary product, is smelted into aluminum. Aluminum can then be rolled into many different shapes. It is also the commodity quoted on the London Metals Exchange.

However, running aluminum smelters is energy-intensive. In China, which is responsible for over half of the global aluminum output, smelting is still powered by coal. If low-carbon or recycled aluminum is used, the net benefit to the environment from the switch to EVs is greater. Companies like Alcoa and Norsk Hydro are selling low-carbon aluminum, which is smelted using renewable power. Aluminum recycling also helps lower the metal’s carbon footprint.

Aluminum prices are soaring

Source: London Metal Exchange

Aluminum prices have been rising on Covid-related supply chain issues in China, higher energy prices, demand growth from carmakers, and geopolitical tensions between Ukraine and Russia, a major aluminum producer.

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How to invest in aluminum: the best aluminum stocks to buy

Aluminum stock list

  • Aluminum Corporation of China (Chalco) (ACH)
  • Alcoa Corp (AA)
  • Norsk Hydro (NHYDY)
  • Century Aluminum Company (CENX)
  • Constellium SE (CSTM)
  • Kaiser Aluminum Corporation (KALU)
  • Arconic Corp (PITTSBURGH)
  • Rusal (RUAL)

Read more about each company:

1. Aluminum Corporation of China (Chalco) (ACH)

  • Market capitalization: $15.3 billion
  • 1-year performance: 70%

The world’s largest aluminum producer, Chalco is a state-backed Chinese company headquartered in Beijing. This vertically integrated aluminum supplier owns mines, refines, and trades aluminum products. It operates 14 bauxite mines in China, in addition to several mines in Guinea and Indonesia. (Bauxite is the raw material from which alumina is made.) In 2020, Chalco mined over 20 million tons of bauxite from its mines and produced over 21 million tons of alumina and aluminum products. (Aluminum is made from alumina.) Chalco generated roughly $29 billion in 2020 sales and it’s profitable.

We note that Chalco also has a small coal business, which may deter environmental, social, and governance (ESG) investors. The company is listed on the New York Stock Exchange under the ticker ACH.

2. Alcoa Corp (AA)

  • Market capitalization: $13.8 billion
  • 1-year performance: 227%

Pittsburgh, Pennsylvania-based Alcoa is one of the largest alumina, aluminum, and bauxite producers. In 2021, the company shipped 16.9 million tons of alumina and aluminum products and 48 million tons of bauxite. Alcoa has access to large bauxite deposits, including 100%-owned mines in Australia and Brazil, and equity stakes in mines in Guinea, Brazil, and Saudi Arabia. In addition, Alcoa runs refineries and smelting facilities in Australia, Brazil, Canada, and other countries.

Out of the large aluminum producers, Alcoa is the most focused on sustainability. The company has been transforming its business to become the lowest carbon emitter among all global aluminum companies. It plans to power 85% of its smelting activity with renewables and has developed the world’s first carbon-free smelting technology, ELYSIS.

Alcoa estimates that ELYSIS could remove 6.5 million tons of carbon emissions in Canada alone if fully implemented across the country’s aluminum smelters. That is like removing 1.8 million passenger cars off the road.

For 2021, Alcoa reported $12.1 billion in revenues and $2.8 billion in EBITDA. They even pay a small dividend.

3. Norsk Hydro (NHYDY)

  • Market capitalization: $18 billion
  • 1-year performance: 74%

Oslo, Norway-based Norsk Hydro is a leading aluminum and renewable energy company. They also make low-carbon aluminum, Hydro REDUXA, and recycled aluminum products, Hydro CIRCAL. Hydro REDUXA reduces the carbon footprint of aluminum to less than 25% of the global average. Hydro also makes aluminum solutions for EV battery packs, enclosure frames, structural body components, and more.

Norsk Hydro emphasizes using renewables to make lower-carbon aluminum. Their renewable energy portfolio includes hydroelectric, wind, solar, and hydrogen. They also have partnerships and joint ventures within batteries and their recycling. In 2020, Hydro generated over $15 billion in revenues. It even pays a dividend, which currently has a yield of over 3%.

4. Century Aluminum Company (CENX)

  • Market capitalization: $1.7 billion
  • 1-year performance: 39%

Chicago, Illinois-headquartered Century Aluminum is the largest producer of primary aluminum in the U.S. The company operates three aluminum smelters in Kentucky, South Carolin, and Iceland. CENX also has a carbon anode production facility in the Netherlands. (Carbon anodes are needed to make aluminum.) CENX can produce over 1 million tons of aluminum per year; they produced about 800,000 tons in 2020.

The company is also developing low-carbon aluminum, Natur-Al aluminum, made in Iceland using 100% renewables. CENX sells most of its aluminum to two customers, the mining giant Glencore and Southwire Company. Glencore is also a large shareholder. CENX reported over $1.6 billion in 2020 sales and has a market cap of nearly $1.7 billion.

5. Constellium SE (CSTM)

  • Market capitalization: $2.6 billion
  • 1-year performance: 28%

A French company, Constellium makes high-value-added aluminum products for the aerospace, automotive, and packaging end markets. Their aluminum can be found in cars, airplanes, and even beverage cans. The automotive segment helps carmakers produce lighter EVs with a greater range. Constellium is also a global leader in aerospace plates and fuselage sheets.

Although Constellium doesn’t profit from short-term aluminum price increases like the aluminum miners, it is the longer-term beneficiary of the growth in electric mobility. The company runs 28 manufacturing sites, shipping 1.4 million tons of aluminum in 2020. They also reported €4.9 billion in sales and €465 million in EBITDA.

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$100

Save and invest spare change

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$5

Work with human advisors

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0.49%-0.89%

Minimum

$100,000

6. Kaiser Aluminum Corporation (KALU)

  • Market capitalization: $1.6 billion
  • 1-year performance: -11%

California-based Kaiser Aluminum makes aluminum products for the aerospace, packaging, automotive, and industrial end markets. They have 14 facilities in North America and focus on aluminum products that are harder to make. Kaiser tries to be neutral with respect to aluminum pricing, passing on metal prices to consumers.

And though they don’t benefit from aluminum price spikes, they can make more aluminum products for EVs as that industry grows. For example, Kaiser makes aluminum structural components and crash management systems for cars. Kaiser reported $1.2 billion in 2020 sales and $153 million in EBITDA, shipping over 500 million pounds of aluminum products.

7. Arconic Corp (PITTSBURGH)

  • Market capitalization: $3.4 billion
  • 1-year performance: 24%

Formerly part of aluminum producer Alcoa, Pittsburgh-based Arconic makes aluminum sheet and plate for cars, planes, and industrial applications. The company has 22 manufacturing sites globally.

About one-third of revenues comes from the transportation market, and Arconic believes that it is at “the forefront of the automotive market’s historic shift to aluminum-intensive vehicles.” Arconic aluminum sheets help make lighter and more fuel-efficient cars.

For 2020, Arconic reported $5.7 billion in sales and $619 million in EBITDA.

8. Rusal (RUAL)

  • Market capitalization: $17 billion
  • 1-year performance: 122%

The world’s third-largest aluminum producer (and the largest producer ex-China), Russia’s Rusal produces around 3.8 million tons of aluminum annually. According to the company, they are responsible for 5.9% of the world’s aluminum output. Rusal’s carbon emissions per ton of aluminum are also below average because they rely on hydroelectric power near their production facilities. The company owns huge dams on rivers next to Lake Baikal in Siberia. Rusal generated $8.5 billion in sales and $871 million in EBITDA in 2020.

However, the Moscow and Hong Kong-listed stock looks risky given the geopolitical tensions between Russia and Ukraine, which could result in restrictions on Russian exports, such as aluminum.

🔔 Interested in other metals used in EVs? Learn how to invest in cobalt, nickel, lithium, or copper.

Aluminum ETFs

You can also invest in the metal through an ETF. Check out this list of aluminum funds.

How to invest in aluminum stocks

We recommend Public, a social investing app that lets you invest in stocks with any amount of money and see what others invest in.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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Frequently Asked Questions

Who is the biggest aluminum producer? 

The Aluminum Corporation of China (Chalco) is the world’s largest aluminum producer. China overall produces more than half of the global aluminum output.