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China's impact on 3 Month LME aluminium prices neutral at best
Edited by : AL CIRCLE
1 min read
We expect much of China's new production of aluminium to be absorbed by improving demand in 2013. However, surpluses in the country are likely to remain as inventory levels stay high throughout the year.
China is unlikely to release its surpluses into the global market, given the 15% export tax on aluminium in place, unless 3M LME aluminium prices surprise on the upside (which is unlikely, in our view); its aluminium market will remain relatively isolated from the world market.
A lack of substantial trade flows and plentiful domestic supply means that decent demand growth in China will not help the global picture - despite the country accounting for around 40% of global demand.
We believe that China's impact on 3M LME aluminium prices is neutral at best, with possible risks to the downside, as imports might be cut. Given this, aluminium prices are likely to continue to be driven by demand outside China and non-fundamental factors.
China is unlikely to release its surpluses into the global market, given the 15% export tax on aluminium in place, unless 3M LME aluminium prices surprise on the upside (which is unlikely, in our view); its aluminium market will remain relatively isolated from the world market.
A lack of substantial trade flows and plentiful domestic supply means that decent demand growth in China will not help the global picture - despite the country accounting for around 40% of global demand.
We believe that China's impact on 3M LME aluminium prices is neutral at best, with possible risks to the downside, as imports might be cut. Given this, aluminium prices are likely to continue to be driven by demand outside China and non-fundamental factors.
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