Market Data

What 8.7¢/kWh Power Does to Aluminum and Electric-Arc Steel Margins

Electricity can be a fifth or more of the cost sheet for smelters and mini-mills. We quantify how the industrial rate flows straight to their per-ton economics.

At 8.7¢/kWh, the average U.S. industrial electricity price as of Apr 2026, per the Energy Information Administration, electricity adds roughly $1,212 to $1,472 to every ton of primary aluminum, which takes about 14 MWh per ton to smelt. Each 1¢/kWh move in the industrial rate shifts smelting power cost by about $140 per ton. With the series up about 5.5% from a year ago, that arithmetic is the difference between a competitive cost sheet and a stranded one for the most electricity-hungry products in manufacturing.

The most electricity-intensive tons in industry

Primary aluminum is, by a wide margin, the heaviest electricity user per ton in mainstream manufacturing: the Hall-Héroult process electrolyzes alumina at 14,000 to 17,000 kWh per ton, which is why smelters historically cluster next to cheap hydropower rather than next to bauxite. Electric-arc furnace steel is the other canonical case, melting scrap takes roughly 400 to 600 kWh per ton, call it 500 as a working figure, and EAF routes now produce about 70% of American steel. Behind those two sit a long tail of power-dense processes: chlor-alkali chemistry, silicon and ferroalloy furnaces, air separation, and industrial gases. For all of them the EIA industrial rate is not an overhead line, it is a raw material.

The per-ton math at today's rate

Run the numbers at the current 8.7¢/kWh. An efficient smelter at 14,000 kWh per ton carries about $1,212 of electricity in every ton of metal; an older facility at 17,000 kWh per ton carries about $1,472. Against aluminum prices that have historically traded in the low-to-mid thousands of dollars per tonne, power alone can consume 25 to 40% of the metal's market value, which is why a smelter's viability is decided by its power contract, not its labor agreement. The EAF steel picture is gentler but still material: at 500 kWh per ton, melting power runs about $43 per ton at the current rate, and each 1¢/kWh move shifts it by roughly $5 per ton, a few dollars that matter enormously in a commodity business where conversion-cost gaps between mills are often under $50 a ton.

Electricity in one ton of primary aluminum at 8.7¢/kWh (14 MWh/ton): $1,212. Computed from the live industrial rate, which has ranged from 8.2¢ (Apr 2025) to 9.3¢ (Jul 2025) in the archived series.

For a smelter, the power contract, not the labor agreement, decides whether the plant lives or dies.

What estimators and buyers should do with it

Two practical uses. If you buy aluminum or EAF-route steel, the per-ton power figures above are a real-time input to should-cost models: when the industrial rate moves a cent, a supplier's smelting cost moves about $140 per ton and a mini-mill's melting cost about $5 per ton, and price-increase requests can be tested against that arithmetic rather than accepted on narrative. If you operate power-dense equipment yourself, induction melters, arc furnaces, electrolysis lines, the same math sets your hedge ratio: multiply nameplate kWh per ton by tons per year, and every cent of rate movement prices itself. At the current 8.7¢/kWh, the series is climbing; the cost sheet should move with it, in both directions.

Use the furnace energy cost calculator to turn your furnace's kWh per ton and the live industrial rate into a per-heat power cost. Price your melt energy

Published 2026-07-13.