Metalnewsnet 17 May ：

Bloomberg reported that aluminum may climb as China ended discounted power rates to high usage companies as part of the country’s efforts to conserve energy and resources.

Mr Li Yang an analyst at state owned researcher Beijing Antaike Information Development Company said that the cost of producing aluminum will increase and this is bullish for aluminum prices. Energy represents as much as half the cost of making the metal used in cars, cans and airplanes.

The National Development and Reform Commission said that China stopped selling electricity at discounts to high consumption companies with immediate effect and the government will impose financial penalties on companies whose power consumption exceeds state set limits. Users affected by the policy change include makers of aluminum and ferroalloy.

Mr Li said that aluminum for 3 month delivery has dropped 3.4% on the London Metal Exchange this year as supplies outpaced demand. The metal declined 0.7% to USD 2,154.75 per tonne at 12:59 PM in Singapore, while prices on the Shanghai Futures Exchange traded little changed at CNY 15,870 per tonne down 8.7% this year. However, there will be a limit as to how high prices will go because domestic demand isn’t too good and stockpiles are high.

(from Bloomberg)