(Bloomberg) -- Aluminum climbed as investors weighed fresh signs of pressure on production, with Alcoa Corp. planning to shut a European smelter and Beijing vowing to cut carbon emissions from China’s huge army of aluminum smelters.

The metal closed in Shanghai at a two-month high, and rebounded in London. Alcoa will halt a Spanish plant for two years amid soaring energy costs in Europe. In China, the government said it wanted carbon emissions from the aluminum industry to fall 5% in the first half of this decade.

Both developments highlight how aluminum’s supply is at risk of tightening into next year and beyond as the energy-intensive industry faces higher costs and more climate regulation. Citigroup Inc and Goldman Sachs Group Inc. are among banks that forecast a deeper deficit in 2022. Prices in London are up more than 40% this year. 

An energy crisis in Europe over the past few months has piled pressure on metals producers, especially in aluminum where power accounts for a large portion of costs. Alcoa’s announcement on the San Ciprian plant came soon after production cuts at the top European smelter.

Beijing’s pledge on Wednesday to reduce aluminum’s carbon footprint underscores how China’s climate push might affect the market. The country accounts for well over half of global production, and the metal’s surge to a 13-year high in October was fueled by output cuts in China.

Aluminum closed 2.8% higher in Shanghai at 20,460 yuan a ton, its highest since late October. In London, prices were up 0.5% by 8:00 a.m. local time, at $2,825 a ton.

Other base metals were mixed, with copper down 0.1% in London and nickel up 0.3%.

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