Industrial Metals: Further Curbing of aluminum production in China

Yesterday, industrial metals prices followed a similar trading pattern as the previous day: initial losses were recovered during the day and partially reversed into gains. The sector was led by aluminum, which at times rose by more than 3% to USD 2,930 per ton. This is the highest level since the end of October. We had reported in the last two days about production cuts in Europe and related to a tight supply situation in the aluminum market. Now, aluminum production could also be (further) curtailed in China. The news agency Bloomberg reports with reference to a Chinese news portal that several provinces have significantly increased electricity prices for energy-intensive industries as of January 1.

Among them is Yunnan Province, where peak load prices have been increased by up to 70%, according to the report. Yunnan produces a lot of aluminum. According to the assessment of the Center for Energy Economics at Xiamen University, this will lead to a rationing of production in the affected provinces. One industrial metal that failed to move into positive territory yesterday is copper. This morning, it is falling back below $9,600 per ton, likely helped by the hawkish Fed meeting minutes (see precious metals above). In the wake of this, not only have equity markets fallen noticeably, but concerns have arisen that tighter monetary policy could hurt demand for commodities. Added to this is the rapid spread of the Omikron variant of the coronavirus, which is also leading to demand concerns.

Source: Commerzbank Research, Photo: Fotolia