China acounts for 40% of global aluminium output and the move by the SRB, while unlikely to have any effect on metal prices, could help to keep Chinese smelters in business and that, ironically, will perpetuate the oversupply situation that has been adversely affecting the industry worldwide and forcing aluminium producers to cut capacity.

Chinese prices have, however, gained 1.9% on the Shanghai Futures Exchange, but industry watchers claim the move is designed solely to support China’s domestic market.

Speaking to the Financial Times, AZ China’s managing director Paul Adkins said the move changes nothing, stressing that the market is ‘seriously over-supplied’ and ‘awash with inventory’.

Source: Financial Times.