Metalnewsnet 14 Jan:

Transportation at home is being disrupted by the heavy snowfall in northern China. Many provinces start to limit electricity use to fight against the tight coal supply. The power operator in Henan province, for example, has warned local aluminum smelters that its power supplies may fall due to local power shortages, smelter officials said on Monday (January 11). China’s Henan province accounts for a fifth of aluminum capacity in the world. The situation is very similar to that in January, 2008. During that period, aluminum contract 0804 posted on Shanghai Futures Exchange (SHFE) began to rise sharply supported by severe snowstorm. The price jumped to a level of 21,300 yuan/ton on March 7, up 3,000 yuan/ton from that January 2. Aluminum price this year may be very likely to repeat as it did in the start of the year 2008, in addition to increasing investment money flows.

Aluminum price is also being supported by the rising cost. Aluminum Corp of China Ltd (Chalco) raised its alumina spot price by to 3,000 yuan per tonne from Jan. 8, according to its website Counted by the price, the product cost of aluminum will rise by about 400 yuan/ton accordingly. Moreover, other raw materials are also on the increase on tight power supply.

Shanghai aluminum futures closed sharply lower in the morning session today after the bank announced to take action to cool growth by raising 0.5% of its bank reserve requirements. However, aluminum may still continue to trend up on improving economic outlook. From insiders, fund buying is still playing the key role in guiding the short-term aluminum market.

(from: Lingtong Metal)

To contact MNN staff for this story: Kylin at +86-28-6676-596674 or metalnewsnet@gmail.com