Higher Prices Boost Domestic Aluminum Production

　　Higher aluminum prices have prompted some Chinese smelters to abandon production cutbacks and are seen leading to restarts of other plants, chipping away at what was expected to be the first global deficit after years of oversupply.

　　A rally in London Metal Exchange futures contracts this year plus record premiums, or charges to obtain physical material, have sharply improved the financial stance of many smelters that were in the red last year.

　　"The profitability of the industry has dramatically improved this year, from losing money to being cash-positive ... so the next risk is to get restarts," Stephen Briggs, a metals strategist at BNP Paribas in London, said.

　　"Quite quickly the industry can get to a position where the deficit gets smaller."

　　The benchmark aluminum price on the LME CMAL3 surged 27 percent in the seven months to the end of August to an 18-month peak. It has since given up some of those gains but is still up about 10 percent so far this year.

　　The rally was partly driven by speculators, who expected the market to swing into deficit this year after many years of overproduction and surpluses.

　　The consensus median forecast of analysts polled by Reuters in July was for a surplus of 235,500 metric tons this year, moving to a deficit of 4,444 tons in 2015. A significant minority of analysts expected a deficit in both years.

　　(Source: China Daily)