Shanghai aluminium near 10-mth high amid slow restarts in China

Shanghai aluminium futures jumped to their highest level in nearly 10 months on Monday, tracking gains on the London Metal Exchange amid optimism about a demand pick-up up in top consumer China.

While demand is recovering, restarts among aluminium smelters in China after production curbs last year had been slow, tightening supply.

"The whole restarting process has been very slow," said Jackie Wang, analyst at CRU consultancy in Beijing.

This is supporting prices as demand recovers after a series of policies from the Chinese government to boost the real estate sector including lower downpayment and interest rates, said Wang.

The most-traded aluminium for June delivery on the Shanghai Futures Exchange rose as far as 13,075 yuan ($2,010) a tonne, its strongest since July 2, 2015. It closed up 2.5 per cent at 12,885 yuan.

On the LME, three-month aluminium was unchanged at $1,652.50 a tonne by 0707 GMT after touching $1,667.50 on Friday, its loftiest since July 29, 2015.

Wang said Chinese aluminium smelters have been very careful in resuming production, fearing that a slew of restarts could weigh heavily on prices again.

"The other thing is restarts take time in China, probably about two to three months and it also costs a lot," she said.

CRU expects 1.47 million tonnes in aluminium smelting capacity may be resumed this year in China, said Wang. That should help increase the country's aluminium output to 32 million tonnes this year from 31 million tonnes in 2015, she said.

($1 = 6.5057 Chinese yuan)