Shanghai aluminum surges in wake of production cuts, China data supports

MELBOURNE — Shanghai aluminum soared to nearly a fouryear high on Monday after fresh capacity cuts in top producer China, while the country’s robust first-quarter growth underpinned its demand outlook for most metals.

Three new aluminum projects with a capacity of two million tons have been halted in Xinjiang in western China for violating rules aimed at curbing capacity, state-owned China Securities Times reported on Sunday.

Shanghai Futures Exchange aluminum jumped more than 4% on the news, with solid growth from China’s factories brightening the outlook for the complex.

China’s economy grew 6.90% in the first quarter from a year earlier, slightly faster than expected, supported by a government infrastructure spending spree and a frenzied housing market that is showing signs of overheating. China’s factory output rose 7.60% in March from a year earlier, while fixed-asset investment grew 9.20% in the first quarter, both beating expectations.

“Given the solid numbers today, the higher cruising speed we have right now gives the government room to maneuver, with policies domestically and for abroad,” said Dominic Schnider of UBS Wealth management in Hong Kong.

“Policies can be more relaxed, and that could give the entire commodities quite a lift.”

Shanghai Futures Exchange ( ShFE) aluminum jumped to 14,995 yuan ($ 2,179) a ton, the highest in five months, before dropping back to 14,680 yuan ($ 2,132) by 0318 GMT, still up 3.70% on the day.

A break of the November 2016 high at 15,015 yuan would open the way to prices last seen in February 2013.

China is the world’s biggest producer of aluminum, accounting for more than half of global output.

ShFE copper rose 0.60% to 46,450 yuan ($6,746) a ton while Shfe zinc was up 1.30%.

The London Metal Exchange was closed for the Easter break.

China’s 2017 export outlook brightened considerably after it reported forecast-beating trade growth in March and as US President Donald J. Trump softened his anti- China rhetoric in an abrupt policy shift.

China’s property cooling measures are likely to show effects after April, China’s statistics bureau told reporters on Monday.

Shares dipped on Monday while the greenback and US bond yields fell after soft US economic data hurt investor sentiment already frayed by worries over North Korea and upcoming French elections. —