Aluminum Up on the LME as Chinese Production Cuts Hit the Market

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It was reported early this month that aluminum smelters in China are cutting production which could significantly improve the outlook for producers of the metal worldwide. China’s aluminum smelters are likely to shut about 2 million tons of operating capacity in the coming months as they try to limit losses amid falling prices and dwindling government support. While the Beijing government allowing businesses to fail has roiled other commodities markets, doing so is a boon to aluminum which still has high demand from the aerospace and automotive industries and therefore a cut in the mass of Chinese aluminum production actually means higher prices for the existing metal producers.

On the LME, the cash price of primary aluminum increased 0.7 percent to $1,688 per metric ton.

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The Indian aluminum cash price experienced the biggest price decline of the day, dropping 1.2 percent to close at INR 104.60 ($1.72) per kilogram on Tuesday, March 25. At $1,732, the 3-month price of aluminum finished the market day on the LME up 0.8 percent per metric ton.

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Chinese aluminum prices closed flat for the day. After dropping for two days, the Chinese aluminum cash price flattened at CNY 12,320 ($1,988). The price of Chinese aluminum scrap was unchanged at CNY 12,250 ($1,977) per metric ton. The price of Chinese aluminum billet saw little movement at CNY 13,590 ($2,193) per metric ton. For the fifth day in a row, the price of Chinese aluminum bar remained essentially flat at CNY 14,200 ($2,292) per metric ton.

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