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October 2017 | Base Metals


Aluminium: Waiting for tightness


All the focus in the aluminium market is on smelter cutbacks, but October also will be a key time for Chinese aluminium demand. Winter cutbacks have begun, so when will we start to see tightness emerging? Or will the scale of restarts and the higher scrap availability – both the result of the rally about cutbacks – prevent tightness from getting anywhere near what aluminium bulls expect? Technically, we are still bullish for aluminium prices in the short term. Fundamentally, we are less so.

Winter cutbacks have begun, so when will we see tightness?
All the focus in the aluminium market is on smelter cutbacks, but October also will be a key time for Chinese aluminium demand. For example, many smelters in Henan province have already reported the initiation of their winter closure programmes, which in theory should start to see a tightening up of metal availability. In Monday trading on the SHFE, the first since September 29 due to the Golden Week holiday, the aluminium contract came back strong to trade at close to the RMB 16,500/tonne level, which is slightly higher than pre-holiday trading.

We have to wait until Friday for the next SHFE stock reading; it was last at 562.9kt ahead...

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