COMMENT: Asian aluminium capacity restarts have jumped the gun on physical demand

Within six to eight months of announcing production closures due to weak aluminium prices, Asian producers have begun trading supply discipline for capacity restarts amid a rise in exchange prices.

The three-month official London Metal Exchange price was at $1,470.5 per tonne on January 4, and rose to $1,642.25 per tonne on April 26. The rise in the Shanghai Futures Exchange was steeper, with the price hitting a 10-month high two days ago at 12,830 yuan ($1,976) per tonne. The futures rally comes on the back of promises from the Chinese government of maintaining a 6.5% growth rate in the 2016-2020 period and assurances that market forces will be allowed to have a greater say in the shaping of the economy. The bullish mood in futures markets has also been augmented by trade data.  Chinese copper imports hit a historic high of 570,000 tonnes in March, a 40% year-on-year rise. The resurgence in oil prices, which surged to a multi-month high on April 27, and the slowing rise of the US dollar have both contributed to the rise in aluminium prices...

Published

Deepali Sharma

April 27, 2016

12:00 GMT

Singapore