South32 and Alumina Ltd shares edged higher on China’s capacity cut news

<p>Shares of South32 Ltd and Alumina Ltd jumped by more than 9% on Thursday March 2 as news about China imposing curbs on steel, aluminium production started circulating in the market.</p> <p><img style="vertical-align: middle; display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/Alcoa-Pinjarra_refinery-upgrade.jpg-1440_0.jpg" alt="News" width="517" height="226" /></p> <p>Beijing released a new draft earlier this week which proposed 30% aluminium capacity cut and 50% alumina capacity cut in &ldquo;Beijing, Tianjin, Hebei, and surrounding areas&rdquo; in order to curb pollution in Northern China, mostly in winter season. Earlier than this, Chinese government enforced a shut-down on production plants in 2008, to cut pollution levels.&nbsp;</p> <p>The production cut however is expected to be implemented not any time before November 2017. An investment information service, Barron&rsquo;s noted that, the global markets has reacted positively to the news as supply cut in China can alter the global market dynamics for alumina and aluminium. &nbsp;&nbsp;What could happen tomorrow or in the near future has affected the current market boosting investor&rsquo;s confidence.</p> <p>{googleAdsense}</p> <p>Australian aluminium and alumina stocks have taken off specially because; Australia is the next export hub for alumina after China. If China&rsquo;s local manufacturers can&rsquo;t get enough steel and aluminium from domestic producers, they&rsquo;ll have to import it from overseas. That will open up new business opportunities for companies like South32 and Alumina. It will hold true for other non-Australian steel and aluminium producers, such as US giant, Alcoa Corp. &nbsp;</p> <p>The Barron&rsquo;s however said that there is a long time gap between the announcement and the implantation and anything could happen to the markets, economy, and the steel and aluminium sector during the period.</p>