What India’s Diet Coke Shortage Means for the U.S.

This is an edition of The Atlantic Daily, a newsletter that guides you through the biggest stories of the day, helps you discover new ideas, and recommends the best in culture. Sign up for it here. For true fans of Diet Coke, soda is sacrament, and reverence comes with strict parameters. The fountain version served at McDonald’s is thought to represent the peak of the form, but given the choice between plastic, glass, and metal vessels, conventional wisdom dictates that Diet Coke tastes best in aluminum cans. In recent weeks, those cans have reportedly been disappearing from shelves across India. Because the country’s Diet Coke comes only in aluminum-can form, Reuters notes, it’s at the mercy of ongoing supply issues stemming from the war in Iran. The Middle East has the capacity to produce 7 million metric tons of aluminum each year (75 percent of which is exported). That’s 9 percent of the world’s production capacity. And since the fighting began in late February, prices have continued to climb worldwide. The base price of a ton of aluminum surpassed $3,600 in April, a four-year high. The metal shows up everywhere in daily life: solar panels, MacBooks, airplane fuselage, deodorant, over-the-counter heartburn pills, cans of grocery-store cold brew. We’re nowhere close to mass shortages in the United States, but around the world, the price shocks are already here. The Middle East’s access to cheap, abundant power is part of what has made it a hub for global aluminum production over the past few decades. Aluminum is derived from a reddish mineral called bauxite. The process of refining and smelting the stuff requires an immense amount of energy, so facilities tend to be located in places where it makes financial sense to do so. When Iran began restricting ship traffic through the Strait of Hormuz, Gulf plants struggled to both import raw materials and export pure aluminum. Facilities in Qatar and Bahrain reacted to the uncertainty by shutting down smelters. Then, on March 28, Iran’s Islamic Revolutionary Guard Corps launched drone and missile attacks on two aluminum facilities in the region; the Al Taweelah plant in Abu Dhabi, which was responsible for making 1.6 million tons of the metal last year, has since been completely shut down. Those strikes led to a hold on about 3.2 million tons of the world’s aluminum—and a strain on economies, such as India’s, that draw from that supply. In the U.S., the metal is even more expensive than it is in other parts of the world—ironically, thanks to one of the most famous Diet Coke enjoyers on the planet. Donald Trump raised the tariff on aluminum imports last year, which ended up both increasing the regional price of the metal and pushing away some of the Canadian metal that American buyers had relied on. As a result, more aluminum from the United Arab Emirates and Bahrain started flowing into the U.S. Now the U.S. is experiencing higher aluminum prices than anywhere else, and it’s more susceptible to incoming price shocks from the Gulf. The U.S. imports far more aluminum goods than it produces, but even as prices soar, shortages haven’t fully hit the U.S. just yet. America “has some buffers: inventories, contracted supply, secondary aluminium and metal already in the pipeline,” Paul Adkins, the managing director of the aluminum-consulting company AZ Global, explained to me. Americans can still get access to the metal if they’re willing to pay more for it, at least for now. Meanwhile Asian economies, which tend to be especially reliant on goods from the Gulf, have already had to deal with shortages. In Vietnam, fertilizer and fuel shortages are punishing rice farmers and cutting into the global food supply; in Japan, companies are fretting over a lack of naphtha, a chemical used to make all sorts of synthetic materials; in Taiwan, semiconductor manufacturers can’t get the helium they need. India depends heavily on the Middle East for its scrap aluminum, and factories throughout the subcontinent are reportedly running low. The country is the second-largest producer of aluminum in the world—it generates many more metric tons than either the UAE or Bahrain—but the war in Iran has made powering those factories more expensive, and companies have slowed production. Also, as in the U.S., the war in Iran may only be compounding a problem that already existed: Last year, the Bureau of Indian Standards tightened regulations on aluminum, which reportedly decreased the supply of usable metal. Globally, the problem is likely to get worse before it gets better. If the war in Iran ended today, the Middle East’s aluminum plants wouldn’t come back online immediately; power-hungry smelters take time to warm up. It’s a little like “if you have a big house and there’s a blackout,” Jean Simard, the president and CEO of the Aluminum Association of Canada, told me. “Normally, you should unplug all your appliances to avoid a surge when the current comes back. It’s exactly the same phenomena with a smelter, except that you’re talking about megapower.” (Oil wells face a similar challenge.) Most people aren’t actively looking to purchase industrial quantities of aluminum. But the longer aluminum prices stay up, the likelier it becomes that companies start passing down their costs. The economic strain of the war in Iran is measured in more than just oil. Related: Here are three new stories from The Atlantic: - The secret to understanding AI - No one knows what to do about Britain’s exploding anti-Semitism. - The end of the world as he knew it. 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You come across a stranger doing something amusing while a song plays in the background. A few swipes later, you hear the song again. Now it’s in your head. Now it seems like an interesting part of the zeitgeist. You save the song to your phone. A question flashes through your mind: Did you just discover new music, or, through the dark arts of algorithmic manipulation, did the music industry just bait a new customer? More From The Atlantic - Exclusive: Kash Patel’s personalized bourbon stash - David Frum: Trump shows he’s still got juice. - Does Claude have feelings? - Misoprostol could be next. - The David Frum Show: How to survive losing a child Culture Break Reflect. Denyce Graves is retiring from performing after a career as one of opera’s leading women. But there’s more work for her to do, Soraya Nadia McDonald writes. Explore. Can the Savannah Bananas save Black baseball? Josh Levin writes about their latest experiment to bring back a Negro Leagues team. 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