Reuters reported that a big overhang of aluminum stocks is set to put a lid on a tentative price recovery. The overhang is largely the result of rising Chinese production.
As quoted in the market news:
Last year plummeting prices and squeezed margins led to production cuts of around 5.5million tonnes with the bulk, about four-million tonnes, in China.
Benchmark aluminium on the London Metal Exchange hit $1 432.50/t last November, the lowest since May 2009.
Prices of the metal used in transport and packaging have since recovered to around $1 500/t, but a stronger rally may only encourage producers to restart idled output capacity.
Large surpluses are due to a ramp-up in China, which accounted for nearly 55% of global supplies of around 57-million tonnes last year.
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