Aluminium MMI quiet, but with upside potential

<p>MetalMiner aluminium MMI inched lower in November. A rising dollar put some pressure but prices held well overall. Analysts say they do see some potential on the upside.<br /><br />Something that has concerned aluminium investors throughout the year is the potential increase in Chinese aluminium production. However, restarts seem to be less than what the markets were expecting earlier. Rising costs of production will likely limit additional restarts, opine analysts.</p> <p><img style="vertical-align: middle; display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/Aluminium%20MMI.jpg" alt="News" width="517" height="226" /><br />China&rsquo;s clampdown on coal mining and supply disruptions in Australia has led to a spike in seaborne coal prices. Thermal coal prices in China have more than doubled this year. In addition, alumina, which is then processed to produce raw aluminium, has risen steeply in price over the last couple of months.<br /><br />Meanwhile, even the most pessimistic estimates put the annual demand growth rate at about 4%. Not only that, but Chinese aluminium demand has been better than expected. Chinese demand from infrastructure and construction has been robust this year. The automotive sector, another big industry for aluminium demand, continues to look strong.<br /><br />In October, China&rsquo;s passenger car sales rose 20% from the same month last year, the sixth consecutive month that car sales have risen by double digits in China. Last year, China announced a 50% cut in the sales tax for cars with small engines to last until the end of this year. Some analysts expect that China will extend the tax cut to next year but if that&rsquo;s not the case, some moderation in China&rsquo;s car sales numbers can be expected.<br /><br />{googleAdsense}<br /><br />Adding to the bull case for demand growth in China is the expected boost in U.S. infrastructure spending following republican nominee Donald Trump&rsquo;s election victory. During the second half, aluminium prices took support above $1,600/mt from better-than-expected Chinese demand combined with lower-than-expected Chinese output. Trump&rsquo;s election is helping fuel a rally across the industrial metals complex. It wouldn&rsquo;t be a strange thing to see aluminium prices comfortably trading above $1,800/mt in 2017, observe MetalMiner analysts.</p>