Daily aluminium production dropped back a bit in March. But with prices currently at multi-year highs, and only very piecemeal restrictions on output in China, economists at Capital Economics doubt it will be long before daily aluminium production starts to creep higher again.
Outside of China, the decline in daily production is a departure from the trend increase since the middle of last year
“According to the International Aluminium Institute (IAI), global aluminium production grew by 5.0% YoY in March. However, given the virus-related disruption to output last year, we think the monthly change in daily production offers a better steer on the underlying trend. Here, we find that daily production in March both in and outside of China was a little lower than in February.”
“The small MoM fall in daily aluminium production in China probably reflects the suspensions of capacity in Inner Mongolia. However, other major aluminium-producing provinces have not imposed similar restrictions on output, and the big picture remains that profit margins at aluminium smelters in China are very high, which should incentivise additional production in the months ahead.”
“Given the huge premiums currently being paid for aluminium in the US, Europe, and Japan, we doubt last month’s decline is a sign of things to come. Instead, we think that aluminium production both in and outside of China will push higher over the course of this year, which should cause the price of aluminium to underperform that of other base metals.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD favours extra retracements in the short term
AUD/USD kept the negative stance well in place and briefly broke below the key 0.6400 support to clinch a new low for the year on the back of the strong dollar and mixed results from the Chinese docket.
EUR/USD now shifts its attention to 1.0500
The ongoing upward momentum of the Greenback prompted EUR/USD to lose more ground, hitting new lows for 2024 around 1.0600, driven by the significant divergence in monetary policy between the Fed and the ECB.
Gold ascends but remains shy of testing $2,400 amid hawkish Fed remarks
Gold prices edged higher late in North American session, gaining 0.22% following a hawkish tilt by Fed Chair Jerome Powell. Economic data from the United States was mixed, though Monday’s Retail Sales report and Powell’s remarks kept US Treasury yields higher, capping the yellow metal’s advance.
Bitcoin price outlook amid increased demand and speculation pre-halving
Bitcoin price is edging lower as markets count only days to the halving. Nevertheless, the dump has not shaken the faith of large holders as they continue to cling to their holding even after a month of steady dumps.
UK CPI inflation data ahead: Sterling hovering north of key support
Following today's mixed bag of employment and wages data, today’s attention is directed to the March UK CPI inflation release. Both headline and core measures have surprised to the downside in the previous two releases and are expected to demonstrate further evidence of disinflation.