CHINA’S booming economy lies behind the surging price of aluminium.

Strong demand from the Asian giant last year helped to push the price of the metal up 20 per cent. Last month the London Metal Exchange’s three-month aluminium price hit a new peak of $2,016 a tonne — a ten-year high.

The Chinese increasingly are dumping their bicycles for cars, while demand there for drinks — and, therefore, aluminium cans — has also grown.

Another driver of aluminium consumption has been the construction industry in China, as well as those of the world’s developed countries, in which relatively low interest rates and tax cuts have stimulated demand. Speculation among traders has also played its part, as the prices of metals have soared across the board in the wake of the oil price boom.

Meanwhile production growth has slowed. Electricity shortages last year forced eight Chinese smelters to close for two months, while strike action in Québec, Canada, and Hurricane Ivan in Jamaica disrupted supplies.

Production of the metal is tipped to grow by only 3 per cent in 2005, after three successive years in which it grew by more than 6 per cent. By contrast, consumption of aluminium is now growing at nearly 10 per cent a year.

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