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Aluminium prices are rising amid concerns that China’s drive to cut emissions could kill capacity. As Daniel Ghali, Commodity Strategist at TD Securities notes, decarbonization may kill aluminium supply.

See:  The outlook is brighter for  palladium than platinum – CE  

Key quotes

“Our gauge of supply risk is showing nascent signs of waning, and provincial sales of strategic reserves could dent this premium.”  

“Reports of emissions cuts have boosted sentiment, but Inner Mongolia’s capacity is contained in cities that have not contributed to overconsumption.”  

“Smelting capacity will mostly grow in Yunnan, which relies on hydropower and wind for energy. Chinese supply angst is overblown.”  

“Positioning has surged, with top SHFE accounts growing length across metals. This ties into reflation, inflation-hedging, and the supercycle narrative but does not reflect facts on the ground.”  

“Chinese deleveraging could see tailwinds morph into headwinds, ultimately catalyzing a reversal in length.”