Chart of the week: supply squeeze boosts aluminium

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.

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"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