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China’s plans have triggered the dramatic increase in aluminum prices

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China’s plans have triggered the dramatic increase in aluminum prices
April 18
10:00 2017

Beijing stopped the operation of three large aluminum factories. Thus, the world market will miss two million tons of this metal.
Plants violated the orders issued by the government of China regarding the electricity consumption. This has caused the production suspension in Xinjiang Province. In addition, Beijing is seriously concerned about the complex environmental situation in the region. It is not reported when or whether the production capacity will be restarted.

In addition to the difficulties in the west of China, the agency Bloomberg became aware of the government’s decision to inspect all the plants in the region. There is some information that if there are violations of the orders made by the PRC leadership, then the operation of such an enterprise will be immediately stopped. Audit of all enterprises of the aluminum industry is planned to be completed by November this year.

Against the background of this news, aluminum shows a record growth in price. Thus, the price for aluminum has increased by 2.6% at the London Metal Exchange; the cost of one ton of the resource is 1 958.50 dollars at the moment. At the Shanghai Futures Exchange, the metal has renewed a four-year maximum with the price of 2,116 dollars per ton.

The expected shortage of aluminum has positively affected the shares of the Russian giant RUSAl. To date, the shares of RUSAl have grown by 1.1% on average at the Moscow stock exchange. The growth trend will continue.

 

The material was prepared with the participation of  Vladimir Haritonov,
a leading analyst of the brokerage company VOSPARI.

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