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September 29, 2021 – China has drastically reduced its aluminum production in 2021. The government’s measures now add up to more than 3.5 million tons of annual production. SHFE is stepping up its entry into the trillion-dollar business of green transformation. And commodity markets are looking at energy, China and the United States with mixed numbers.

Aluminum: 3.5 million tons less production in China
Aluminum: 3.5 million tons less production in China

Aluminum production: nearly 3.5 million tons of aluminum less

According to recent calculations, the Chinese government has now curtailed production capacity for about 3.5 million tons of aluminum for 2021 due to energy shortages and pollution. For China, which consumes 95% of its own aluminum production, this is an alarming record. The Asian country has already been considered a net importer of primary aluminum since 2020.

Aluminum spot and futures prices remain high

Future prices for aluminum in London and Shanghai also reflect this, reaching a record high of more than $3,000 per ton on the LME in September. And are still hovering above $2,900 on the LME and above $3,500 on the SHFE.

Source: shfe.com.cn, lme.com

Correction in aluminum prices overdue?

Even if analysts consider a correction of aluminum prices to be overdue, it must be kept in mind that it was already assumed at the beginning of 2021 that aluminum is significantly too scarce – at that time, an already existing shortfall of 1 million tons worldwide was assumed. With the renewed cuts, there is likely to be a further increase in the annual shortfall.

Cobalt, Hydrogen: SHFE to launch new futures

China’s Shanghai Futures Exchange on Tuesday announced plans to add more futures – cobalt, hydrogen and ammonia – to trading. In the currently hip guise of the green transformation, they want to earn a share of the trillion-dollar greener economy business in the near future. This is also indicated by SHFE’s earlier announcement of its intention to trade natural gas futures.

Why natural gas, hydrogen, ammonia and cobalt?

Natural gas and hydrogen are considered to be the main future global energy sources, ammonia is an important ingredient for fertilizers in the agricultural industry and cobalt is currently a main component in batteries for electric vehicles.

Facts and figures: Mixed outlook on the markets

Commodity markets are moving sideways today with mixed numbers. Aluminum and stainless steel spot prices in China have stabilized and are rising again. The main focus in the markets at the moment is on the sharp rise in energy prices worldwide, the production cuts in China and the possible government shutdown in the United States.

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