Why Aluminum Prices Might Soon Be Your New Best Friend (Even If You Don’t Own Any)

Ever wonder what makes your soda can crushable or your airplane seat lightweight? It’s usually aluminum! And guess what? The company that makes a lot of this special aluminum, called Constellium, is making some interesting moves that could eventually trickle down to affect how we all think about our money.

The Story of Constellium and Its Aluminum Business

Imagine you have a super popular lemonade stand. You need lemons, sugar, and cups, right? These are like the ingredients for making lemonade. For Constellium, their “ingredients” are things like scrap aluminum (old cans and parts) and other metals that go into making new aluminum products.

For a while, the cost of these “ingredients” was pretty high. It was like the price of lemons suddenly doubled! This made it harder for Constellium to make as much profit from selling their lemonade (which is their aluminum products, like parts for cars and airplanes, or cans for your drinks).

But here’s where the news gets interesting. The company’s boss, Jean-Marc Germain, said that the cost of these “ingredients” is starting to get better. It’s like the price of lemons is finally coming back down to a more normal level. This is called “widening scrap spreads.” It means the difference between what they pay for the raw materials and what they can sell their finished aluminum products for is getting bigger.

Even though they had already bought some of their “ingredients” at the higher price (because they had to plan ahead), they expect this good news to really help them make more money in the coming months and into next year.

On top of that, Constellium has been doing a fantastic job selling more of their aluminum products. Their total sales, which is like the total money they brought in from selling lemonade, went up by a big chunk – 20% compared to last year! And their profit, the money they actually get to keep after paying for everything, also jumped a lot. This was partly because they got better at making their aluminum at one of their factories and because people are buying a lot of aluminum cans for drinks and food.

So What? Why Should You Care About Aluminum Prices?

Okay, so why should you, a 17-year-old who might not even have a bank account yet, care about a company that makes aluminum? It’s all about how the economy works and how changes in one area can affect many others.

Think of the economy like a giant interconnected game. When a big company like Constellium does well, it means a few things:

• More Jobs: If they are making more products and more money, they might need to hire more people. These people then have more money to spend on other things, which helps other businesses.
• Innovation: Companies that are doing well can invest more money into finding new and better ways to make things. This could lead to lighter, stronger, or more eco-friendly aluminum products in the future, which could make your future car more fuel-efficient or your next phone even lighter.
• Impact on Everyday Items: Aluminum is used in so many things! From the foil in your kitchen to the parts in your car and the cans your favorite drinks come in. When companies like Constellium are doing well and producing more, it can help keep the prices of these everyday items stable, or even potentially lower them over time.
• Investment Opportunities (Later On): While you might not have money to invest right now, understanding how companies operate and make money is the first step to learning about investing. If Constellium continues to do well, it could become an interesting company for people to invest their money in when they are older. When a company’s stock price goes up because it’s doing well, it means people who owned a piece of that company (stock) made money.

Even though this news is specifically about Constellium, it highlights a broader trend. When the cost of raw materials goes down and demand for products goes up, it’s generally a good sign for the economy. This can lead to more money circulating, which can eventually benefit everyone.

Consider your own allowance or any money you earn from a part-time job. If prices for things you want to buy (like video games, clothes, or saving for a car) are stable or going down, your money can go further. This is the same principle, just on a much larger scale.

What Can You Do Next?

This news about Constellium is a great reminder that the world of business and finance is always changing. Even if you’re not actively investing yet, learning about how companies make money and how their performance can affect the bigger picture is super valuable.

Your Actionable Step: Start paying attention to the news about companies you interact with every day. Think about the brands you like, the products you use, and the technology you enjoy. Do a quick search to see if you can find any recent news about them. It’s like being a detective for how the world around you works! You might be surprised at what you discover. For example, you could look up the companies that make your favorite sneakers or the brand of your smartphone and see if there’s any recent news about their sales or new products.

Disclaimer: This is for educational purposes only and not financial advice.