Structural changes on the aluminium market

9th May 2017

Olivier Aeschlimann, Senior Financial Analyst, Fund Manager

Since the beginning of the year, aluminium has clearly outperformed all other industrial metals. Its price has progressed by 11.9%, while copper and zinc (+0.1% and +0.3%) remained almost flat and nickel lost 10%. This performance reflects the important structural changes taking place on the Chinese market. The country, which exported its overproduction to terrible prices, will indeed cut its production. This should realign the market until then characterised by overcapacity. This decision has however nothing altruistic: the central committee of the Chinese communist party will in future favour profitability over volume. Aluminium production is very capital intensive and consumes a lot of electricity. These resources will be deployed much more effectively, for the development of the Chinese economy 2.0, which will be oriented on services, house hold consumption …. and new environmental technologies.