Sorry for the delayed answer. The point is that you base your sketisism on underlying industrial growth in China given your observation that electricity output is down year on year. Nevertheless, as pointed above that’s not necesarily a valid point.

With respect to the We believe prices will take off toward $2,000 per mton after this period of consolidation is over, which could occur any time from today to September the reference quoted, they meant and mean the consolidation process could last up top September and then the next upward leg toward $2,000 pe rmton will start. The idea they are trying to give is that the consolidation could last up to September. That is even clearer if one follows their reports. Up today, they have really hit it.

Have a great weekend !

“Often economists look to electric power usage as a reality check. Some have asked how China’s electricity consumption could have fallen in the first quarter of 2009 while industrial output rose, particularly as key heavy industries are power-guzzling. Power usage data is considered by some as being harder to manipulate.
But UBS economist Tao Wang said, “people believe there is a fixed correlation between growth of electricity consumption and GDP growth, but I think that correlation is quite unstable at times, and this is one of those times.” Industrial power usage did slump less in March just as industrial output climbed much higher than expected. Services and household consumption helped prop up growth, while heavy industry was weak during the first quarter, she added. “I don’t see any real conflict between the profile for electricity production relative to usage and value-added industry data,” Fishwick said. “I think they match well enough given that they’re never going to match perfectly.”

Beyond SRB stockpiling , which again evidence clearly shows is just one factor behind the increase in demand, there is no evidence of stockpiling. All the contrary, aluminum inventories reported by the SHFE are sharply down so far this year. Can you offer evidence of oversupply or private stockpiling? In fact latest PMI data for China (March) shows inventories at manufacturing falling.

Now you say electricity is down “due to a general reduction in nearly all manufacturing”, but you are wrong there, latest data for Industrial production (March) shows growth (not declines) just as the PMI survey from China for March also showed growth in production and new orders. Chinese falling aluminum output is intensifying not reversing, just as the data from the IAI showed today. It is the most energy intesive aluminum industry. It does helps explains the fall in electricity demand.

Again, In my view you are missing the point because your not analyzing the data yourself but probably relying on what other analysts say. Data shows yes an uptick in imports but also in consuption (reatail sales, housing, autos, electrical, packaging).

With respect to the refered report, their price forecast is near $2,000 per mton by the end of the year (after the period of consolidation that could last until September). The ortodox and “respected” analysts you refered were the same ones that were expecting prices above $3,000 per mton or higher for this year just last September. Those guys seem to be Bi-Polar in my view, just extrapolating the trend.

Guys, I enjoy the discussion.

I disagree and think you contradict and are confused. I have read the report you refer to.

Global aluminum demand has increased around 17% in China since Dec, given SRB stockpiling (yes), but also orders from construction, auto sector, electric grid system, packaging and re-stocking. Retail sales, auto sales, housing starts, imports of oil, copper, aluminum are at record highs (have you see the data?). Electricity output is down precisely because aluminum output is down still around 4 million tons in an annualize basis (haven you read about how electric companies are offering lower prices to smelters in order to incentive them to restart output and increase their demand of electricity?) . China clearly shows today a similar economic profile it had before the LB Bankruptcy (except to the revival of its experts given still depressed demand in the western world).

Now, if you disagree with the refered report and think the price rally has no substance, why then you don’t see new lows and do agree entirely with their prognosis that price will range trade between $1,300-1,600 per mton?