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Aluminium Market Update:A pause in global output

addtiame:2016/10/19 click:

Gauging the time lag in production response

Aluminium has surprised on the upside so far this year. Demand indicatorssuggest a year on year improvement in Chinese demand, but given that thedemand was still robust in 2015, we think this strength can be best explainedby the supply side dynamics. Question marks over the official Chineseproduction stats notwithstanding, the lag in capacity restarts means thatsupply is well short of demand growth leading to a drawdown in inventories.Almost all of the Chinese aluminium industry is now profitable and has been sofor most of Q2. Whilst Q3is likely to remain strong, we would expect theproduction momentum to pick up in Q4, pressuring prices into 2017