Chart of the week: supply squeeze boosts aluminium
A stronger global economic backdrop has bolstered demand for aluminium, while in China, a clampdown on pollution and excess capacity after years of rampant growth is squeezing supply.
Aluminium has been overshadowed by other base metals in recent months, but it is also enjoying a strong rally. Prices in London have surged by 25% this year to a three-year high around $2,100 a tonne; in Shanghai they are close to six-year highs. A stronger global economic backdrop has bolstered demand, while in China, the biggest producer, a clampdown on pollution and excess capacity after years of rampant growth is squeezing supply. Chinese plants are set to produce 30% less this autumn and winter, reckons Beijing. Stockpiles have slipped to their lowest level since 2008.
Viewpoint
"Donald Trump seems determined to have that trade war with China [he] has rejected a deal agreed by Wilbur Ross, his commerce secretary, that would have seen China substantially reduce its [huge] capacity in commodity steel production The Chinese offer would have gone some way towards rebalancing supply and demand; even the hardline Mr Ross thought it preferable to a tit-for-tat trade war... Trump, however... [prefers] the sledgehammer of much higher tariffs. If implemented, China will merely respond in kind; what America may gain in... protection for... its steel industry it will lose in blocked exports and higher prices in the supply chain."
Jeremy Warner, The Sunday Telegraph
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
