Aluminium hits 10-year high as China curbs smelters
Aluminium prices hit a 10-year high on Tuesday as production slowed in China amid tougher controls on electricity consumption. Prices rose 3pc to $2,726 (£1,985) on the London Metal Exchange - the highest level since May 2011 with analysts forecasting further gains.
China produces more than half the world's aluminium but the industry's power-hungry smelters have been curbing output amid soaring demand for electricity in China.
Wei Lai, an analyst with
TF Futures, told Bloomberg: "A slew of Chinese policies has recently come to affect aluminium output, pushing prices higher.
Chinese policies including the power consumption cap are expected to stay through the rest of the year, so the upside momentum remains for aluminium. Prices can hardly retreat as long as demand remains intact."
Soaring demand for electricity in China during the summer has led to overloaded energy grids and power outages, according to S&P Global Platts.
Several provinces and regions have ordered companies to use power more carefully, it added earlier this month. Producing aluminium used almost 7pc of China's electricity supply last year. China's Guangxi region, an aluminium production hub, has called for tougher controls on energy consumption.
It means eight aluminium smelting companies in Guangxi will have to cut September production to a maximum of 80pc of average monthly output, according to consultancy Mysteel. China is now expected to produce about 500,000 to 600,000 tonnes less this year than was predicted at the start of 2021, although its output is still expected to be higher this year than last.