A new start was born in the metal market. On the London Stock Exchange, aluminum hit a new 10-year high, extending a six-month rally.
Three-month futures contracts for aluminum rose by 2.9%, reaching the highest level since 2011. A bit later, prices slowed down. However, nobody doubts that soon the metal will surge again. For instance, on the Shanghai Futures Exchange, futures contracts for October are already trading at 21,390 yuan ($3,311.09) per ton, approaching the highest level since August 2008, namely 21,550 yuan. According to analysts, the rally could be fueled by production restrictions in China, which raised concerns about the possible deficit of the metal in the market.
The authorities of Guangxi Zhuang Autonomous Region, located in southern China, a major center of aluminum and alumina production, called for tighter control over energy consumption. Experts are worried about new production restrictions.
"Recently, a series of Chinese policies have affected aluminum production, which has pushed prices up", Wei Lai, an analyst at TF Futures Co., said. "The policies that include the power consumption limit are expected to remain in place for the rest of the year. Therefore, the bullish momentum remains for aluminum. Prices will hardly fall as long as demand remains intact."
