Rio Tinto Group’s aluminum boss sees prices for the lightweight metal heading for an “extremely” volatile period, with uncertainty over when China will curb production helping to keep investors on edge.
“That’s really where the uncertainty is at the moment,” Alfredo Barrios said in an interview at Bloomberg’s Toronto office. “There’s no doubt that if you look at the supply side, if you look at the environmental issues, sooner or later that will change. But when is a question mark.”
China has ordered curbs on steel and aluminum output in as many as 28 northern cities during the winter heating season as it steps up its fight against pollution, people with knowledge of the matter said early in March.
Despite those reports, inventories on the Shanghai Futures Exchange continue to rise, touching the highest in more than a year. The increase is due to seasonal factors and production in the country currently rising at double-digit rates to take advantage of strengthening global aluminum prices, Jorge Vazquez, the managing director at Harbor Intelligence in Austin, Texas, said in a telephone interview.
Aluminum for delivery in three months has gained 28 percent in the past year on the London Metal Exchange to $1,959.50 a metric ton. The price was up 16 percent in the first three months of 2017, the fifth straight quarter of gains, marking the longest streak since 1994.
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