Commodities

Aluminium hits 16-month low on demand woes

Reuters London | Updated on December 24, 2018 Published on December 24, 2018

Aluminium hit 16-month lows on Monday as investor worries over slowing global growth and tightening monetary conditions overshadowed news of smelter cuts in China.

Chinese aluminium producers are set to cut at least another 800,000 tonnes per year of smelting capacity in the coming months, while Beijing plans to ratchet up support for the economy in 2019 by cutting taxes and keeping liquidity ample.

Investors are, however, fretting that the global economy is slowing just as monetary conditions the world over are tightening, with political instability in the United States leaving open the possibility of a prolonged government shut-down.

There are also signs the US trade dispute with China is hurting growth in the world’s top metals consumer. “At the moment, there’s too many headwinds on the demand side for people to be concerned about supply,” said Colin Hamilton, head of commodities research at BMO Capital Markets.

However, he added that the aluminium market globally had a reasonably substantial deficit, while it also appeared that Beijing was looking for more consolidation in China’s aluminium sector.

Aluminium was down 0.6 per cent at $1,898.50 a tonne by 1124 GMT, having hit its lowest since mid July at $1,896.50. The metal hit 16-month lows last week after the US lifted sanctions Russia’s Rusal, the world’s second largest aluminium producer.

China has cut more than 3 million tonnes of aluminium smelting capacity so far this year, but this has been offset by the resumption of some production and new production lines.

Published on December 24, 2018
This article is closed for comments.
Please Email the Editor