Santa Claus may have to retool his gift-giving strategy this year, since the lump of coal once reserved for naughty kids may now be worth more than some of his toys.

The storied rise in coal prices underlies a global supply deficit that is now making its presence known within the aluminum market as well. Just as Chinese utilities warn of potential power outages, the country's top 20 aluminum producers announced a collective agreement Thursday to curb aluminum production by 5%-10%. The production cuts may total 400,000 tons this year, exacerbating the impacts of several recent supply disruptions reported around the world.

When it comes to carbon footprints, aluminum wears a size 15 boot. In one week, China's aluminum smelters alone consume enough electricity to supply 2 million people for one year. While China's aluminum exports grew 43% in June over the prior month, the national stockpile of coal dwindled from a 15-day supply to just 11 as of early July.

The announcement sparked a rally throughout the sector. Aluminum prices struck a new record Thursday before settling up 6% at $1.49 per pound. Shares of Century Aluminum (NASDAQ:CENX) rose nearly 10% to close above $62, followed closely by a 9.5% move for Alcoa (NYSE:AA), and an 8% move for Aluminum Corporation of China (NYSE:ACH). Kaiser Aluminum (NASDAQ:KALU) was the notable exception, with shares actually losing ground on the day.

China's hand may have been forced in this instance by a very real shortfall in coal supply, but I sense a secondary objective at work. A statement accompanying the agreement called upon Chinese producers to show "support for the Beijing Olympic Games and creat[e] an easier market condition for the industry." I believe this production cut kills two birds with one Olympic shot put: conserving electricity as the country struggles to rebuild its coal supply, while pressing aluminum prices higher to create more attractive margins for China's producers.

Furthermore, this development provides further confirmation of the bullish fundamentals that underlie the thriving worldwide coal industry. I see shares of U.S. coal companies like CONSOL Energy (NYSE:CNX) and Patriot Coal (NYSE:PCX) continuing to reward shareholders for some time to come. As a major producer of both coal and aluminum, I believe diversified miner Rio Tinto (NYSE:RTP) also finds itself in a Foolish sweet spot.

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