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Shanghai Aluminum at 10-Month High

Shanghai Aluminum at 10-Month HighShanghai Aluminum at 10-Month High

Shanghai aluminum futures jumped to their highest level in nearly 10 months on Monday, tracking gains on the London Metal Exchange amid optimism about a demand pick-up up in top consumer China.

While demand is recovering, restarts among aluminum smelters in China after production curbs last year had been slow, tightening supply, CNBC reported.

“The whole restarting process has been very slow,” said Jackie Wang, analyst at CRU consultancy in Beijing.

This is supporting prices as demand recovers after a series of policies from the Chinese government to boost the real estate sector including lower downpayment and interest rates, said Wang.

The most-traded aluminum for June delivery on the Shanghai Futures Exchange rose as far as 13,075 yuan ($2,010) a ton, its strongest since July 2, 2015. It was up 1.8% at 12,805 yuan by midday.

On the LME, three-month aluminum slipped 0.6% to $1,643 a ton after touching $1,667.50 on Friday, it’s loftiest since July 29, 2015.

Wang said Chinese aluminum smelters have been very careful in resuming production, fearing that a slew of restarts could weigh heavily on prices again.

“The other thing is restarts take time in China, probably about two to three months and it also costs a lot,” she said.

CRU expects 1.47 million tons in aluminum smelting capacity may be resumed this year in China, said Wang. That should help increase the country’s aluminum output to 32 million tons this year from 31 million tons in 2015, she said.

LME copper dropped 0.6% to $4,999 a ton after hitting a one-month high of $5,091 on Friday. Shanghai copper was last up 0.2% at 38,020 yuan a ton after earlier peaking at 39,010 yuan, its highest since March 7.

China’s commodity exchanges are trying to cool their markets as benchmarks rallied rapidly last week, with turnover of a single rebar contract on Thursday worth nearly 50% more than the total value traded on the Shanghai stock exchange.

Shanghai rebar slipped 1% to 2,625 yuan a ton on Monday.

 

Financialtribune.com