Aluminum could stage a significant advance if top producer China expands its supply-side reforms to an industry that also faces pressure from U.S. trade measures, according to Goldman Sachs Group Inc.
While the bank’s baseline outlook for the metal used in cans and window frames remains “modestly bearish,” aluminum could rise to about $2,000 a metric ton on the London Metal Exchange if China slashes output by 2.5 million tons, analysts including Yubin Fu and Max Layton wrote in a report dated Jan. 18. That’d be enough to tip a balanced global market into a deficit of at least 1.5 million to 2.5 million tons, they wrote.
Goldman said its analysis draws on reports of possible capacity cuts in three provinces that would account for 11 percent of China’s total and 6 percent of world capacity. Aluminum, which lagged its five LME peers with a 12 percent increase last year, currently trades around $1,800 a ton.
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