Economic data and production cuts boost industrial metal ETP flows

ETFS Aluminium (ALUM), a physically backed aluminium ETP issued by London-based commodity specialist ETF Securities, enjoyed record inflows of $54m over the week.

Among the production cuts was the decision by Rio Tinto, the world’s largest aluminium producer, to phase out production at its Shawinigan smelter. The UK-headquartered company said in a statement last week that it would immediately reduce production at the Quebec, Canada, plant by 50,000 tonnes and take the remaining 50,000 tonnes of capacity offline by the end of November.

Other aluminium producers, especially in China, are also expected to cut production as continued oversupply is harming prices.

ETF Securities believes that sustained robust growth for the Chinese economy remains in place and that this should continue to favour more industrially-linked metals.

Martin Arnold, a senior analyst at the firm, said: “Industrial metals are heavily dependent on the outlook for Chinese growth. China accounts for around 40% global demand across the industrial metal complex, but concerns over a China slowdown are exaggerated in our opinion. The industrialisation process of China is still at only an early stage, and as such, when a massive population is combined with increasing incomes, demand for raw materials, and industrial metals in particular, is likely to continue to continue at a robust rate. On the supply side, concerns over labour stoppages and declining ore grades are prevalent and raise the cost of metal mining production.”