China could hike aluminum imports in second half of 2011

Chinese aluminum imports could increase in the second half of 2011 as marginal costs in China are above the average price at the Shanghai Futures Exchange, says Barclays.

Higher power prices and higher prices for carbon anode are also giving an edge to China importing aluminum. If prices rise across the board, it could mean the idled capacity in China resumes, but so far existing supply-side constraints there have prevented a restart.

“Unless SHFE prices rise to offer more of a profit margin to domestic smelters Chinese imports are likely to pick up in the second half. Overall, we believe that these forces will provide good downside support for London Metal Exchange prices in the current risk-off environment,” they say.

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