Aluminium surges after further Chinese output curbs
09:09, 31 August 2021
Aluminium advanced on Tuesday 31 August, as China’s policy of placing controls on the smelting industry expanded to the country's Guangxi region, raising tight supply concerns.
At the London Metal Exchange, aluminium traded 2.25% higher at USD2,712.5 per tonne on Tuesday.
The price of the metal – used in packaging, construction material, and automobile manufacture – has been rallying as Beijing’s dual control of energy consumption led to production curbs in the aluminium-producing regions.
Shanghai aluminium futures rise
On Monday, aluminium at the Shanghai Futures Exchange hit its highest level since May 2006 at CNY21,550 per metric tonne, after rumours that China’s Guangxi region issued a notice to convene a meeting to strengthen the energy consumption policy, Shanghai Metal Market (SMM) reported on 30 August.
Aluminium rose last week as authorities in China's Xinjiang Region limited output at five smelters as part of a drive to reduce emissions.
“Provinces are looking to cut carbon emissions in line with China’s net-zero plan. This is leading to a reduction in output from provinces in China; this should keep SHFE prices elevated as China’s market remains tighter,” commodity trading firm Sucden Financial said in its Quarterly Metals Report.
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Prevent "malicious speculation"
Sucden Financial expects aluminium prices to trend higher in the third quarter – but any tightening in policy from the Fed and dollar strength will cap gains, it added
In a separate report, SMM reported today that the China Nonferrous Metals Industry Association held a video conference with crucial aluminium producers on 30 August. The meeting aimed to prevent malicious speculation and price hikes in the aluminium industry.
Chalco, Weiqiao Pioneering, State Power Investment, Shandong Xinfa, East Hope, JISCO, Henan Shenhuo, Tianshan Aluminium, Hangzhou Jinjiang and Yidian Holding Group all attended the meeting. The total aluminium production capacity of the 10 companies exceeds 30 million metric tonnes, accounting for over 70% of the full national capacity.
Container shortage
Capital.com reached out to the Association to confirm the report, but it had not responded at the time of writing
Meanwhile, Tradingeconomics.com reported that a shortage of containers used to transport industrial metals from Asia to the US and Europe also added bullishness to aluminium prices.
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Read more: Aluminium rises on tight supply fear after China’s prefecture limit smelters output
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