According to Barclays Capital, Mainland China's aluminum output remains strong, meaning the market is still not getting the supply cuts necessary to start whittling down ample global supplies.
According to the British bank, copper and lead production hit record highs while zinc production rebounded. Aluminum output, meanwhile, rose 20% YoY partly in comparison to a weak base. There is thus little indication of the smelter cuts we believe are needed to restore balance to the market.”
Barclays said that government intervention, whether via power subsidies or stockpiling, is keeping loss making smelters open and exacerbating the surplus. Semis production surged 24% YoY and the year to date rate picked up to 15% which in our view suggests there may have been a build up in semis inventory.