Aluminium futures have charged ahead of those of other metals in 2017, hitting a 22-month high in early March, but the rally has now faltered.
Prices had soared because China, which has doubled output since the turn of the decade and accounts for over half of global supplies, had announced its intention to clamp down on production in order to cut pollution from smelters. But so far, at least, there is scant sign of action.
China churned out a monthly record of 2.95 million metric tonnes of the metal in January, says Rhiannon Hoyle in Barron’s. That’s up from 2.89 million in December.
“Emerging markets are… on the way back… If China avoids a financial accident, and President Donald Trump’s reflation trade comes through as promised, it is hard to see how emerging markets can fail to benefit. The final propulsion behind emerging markets is that they are correctly perceived to be cheap… [they are] on a [cyclically adjusted price-earnings] multiple of 12, compared with a historic median of 17 and a high of 35. This is of no help in timing the re-emergence of emerging markets, but it does show that in the long run buying them now should pay off. It is seldom a bad idea to buy something when it is too cheap.”
John Authers, Financial Times