What I Learned This Week

Will aluminum prices benefit from Beijing’s supply-reduction mandates? Aluminum futures and Chalco have more upside.

In WILTW October 27th, 2016, we authored an article headlined “Will aluminum benefit from the recent upsurge in coal prices? Will Chalco benefit from coal-industry reforms?”, which made the case that surging coal prices would translate into higher prices for aluminum, which is highly energy-intensive. Beijing’s supply reforms prompted a 100%-plus gain in thermal coal prices last year and one could argue that similar gains could happen in aluminum. We reiterate our bullish view on aluminum futures and on Aluminum Corporation of China, a.k.a. Chalco (601600 CH, CNY 5.67; 2600 HK, HKD 4.82), China’s largest state-owned aluminum smelter, despite their large gains over the past nine months. Chalc…

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