Citigroup gets it right - almost

I have just read a brief report by Bloomberg’s Martin Ritchie on a client note issued by Citigroup. I haven’t seen the Citigroup report itself, but Martin’s report makes it pretty clear that Citigroup expects China to continue exporting aluminium.

Citigroup sees a surplus of metal in China as the primary catalyst for exports continuing and/or growing. Restarts are adding metal to the market, and Citigroup says up to 1 million tonnes of capacity has now restarted. In addition to the idled capacity returning, Citigroup mentions new capacity also being built, as cash cost pressures ease.

Citigroup have got it pretty much right. According to our analysis, some 19 smelters have restarted or are planning to restart, for a total of 1.1 million tonnes. We will be publishing a list of all restarts in next week’s World Aluminium Monthly. We also report on the pipeline of new and restarting capacity in our monthly Pipeline Report.

Citigroup have also said that cash cost pressures are easing. We will have a lot more to say on this in the next 48 hours or so, when we publish our next AZ China Quarterly Cash Cost Curve analysis and Client Briefing Note.

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