Aluminum prices have been climbing sharply in Europe, driven largely by fears of an energy shortage that is hitting the metal industry hard. Aluminum smelting is an energy-intensive process, with electricity costs making up about 30% of total production expenses. As power prices soar across Europe, aluminum producers are facing a serious squeeze.
The root of the problem lies in Europe’s high electricity costs compared to other regions like the U.S. In fact, power prices for European aluminum smelters are nearly double those in America. This makes it much more expensive to produce aluminum locally and threatens the competitiveness of European smelters on the global stage.
Adding to this pressure is growing competition for cheap electricity from data centers powering artificial intelligence technologies. Big tech companies are willing to pay premium rates for power—sometimes far above what traditional industries can afford—which drives up overall energy prices even further.
This clash between digital growth and heavy industry risks forcing some aluminum plants to shut down or reduce output due to unsustainable costs. Such closures would tighten global supply chains and increase reliance on foreign producers outside Europe, potentially undermining industrial security and slowing progress toward green energy transitions.
The recent surge in aluminum prices reflects these challenges vividly: spot primary aluminum has jumped significantly within days as markets react nervously to ongoing uncertainties around energy availability and cost.
In short, Europe’s looming energy crunch is reshaping its metals sector dramatically. Without swift policy action focused on expanding renewable power capacity and balancing industrial needs with emerging digital demands, European aluminum producers may face a tough road ahead—one marked by higher costs, reduced output, and greater dependence on imports from resource-rich countries elsewhere in the world.