Chinese Aluminum Smelters Register Decent Profits in 2016 on Surging Prices - 3 Mar 2017

Commodity Intraday Tips

Gold gains in Asia in rebound to recent dips on Fed views.
Gold gained in Asia on Friday with investors buying on recent dips spurred by growing expectations of a Fed rate hike this month. Gold for April delivery on the Comex division of the New York Mercantile Exchange edged up 0.07% to $1,233.75 a troy ounce, while silver futures gained 0.25% to $17.793 a troy ounce. Gold extended losses from the prior session, as growing expectations of a March rate hike pushed the dollar higher and weighed on the yellow-metal, after Fed Governors’ Brainerd and Powell continued the hawkish rhetoric delivered by several key officials over the past few days.Fed Governor Lael Brainard said Wednesday evening the Fed could raise rates "soon," while Fed Governor Jerome Powell said Thursday that “the case for a rate increase for March has come together”. Meanwhile, upbeat U.S. jobless claims data heaped further pressure on gold prices, after the labor department said on Thursday, Initial jobless claims fell by 19,000 to 223,000 for the week ended February 25.

Chinese Aluminum Smelters Register Decent Profits in 2016 on Surging Prices.
With aluminum prices bouncing back, Chinese aluminum smelters reported decent profits in 2016. According to financial reports by major listed aluminum companies, net profits at the five major producers surged in 2016 on a yearly basis. In 2016, production costs at domestic aluminum smelters grew with rising prices of alumina, coke and transportation fees. But, surging aluminum prices helped improve their profits.According to SMM data, the average profit at domestic aluminum producers was 1,000 yuan per tonne in 2016, with the peak level of around 2,500 yuan per tonne. At present, the average profit is about 450 yuan per tonne.China's aluminum smelting industry climate index rose from 19.71 in January 2016 to 47.16 in January 2017, according to China Nonferrous Metals Industry Association, a sign of big improvement in business profits in the whole industry. Domestic aluminum smelters also turned active in restarting offline capacities or expanding new capacities. SMM data show the number of capacities being commissioned among all restarted or newly-increased ones reached 3.95 million tonnes in 2016, and the number is expected to grow further in 2017.

Crude gains in Asia with U.S. rig count figures ahead.
Crude prices gained slightly in Asia on Friday as investors eyed rig count figures in the U.S. for direction. On the New York Mercantile Exchange crude futures for May delivery rose 0.15% to $52.69 a barrel, while on London's Intercontinental Exchange, Brent gained 0.13% $55.15 a barrel. Meanwhile, market participants turn attention to Baker Hughes rig count, due to be released at 13:00 ET on Friday. Last week, the Baker Hughes US oil rig count rose by 5, topping 600 for the first time since October 2015.Overnight, crude settled more than 2% lower on Thursday, as rising U.S. crude stockpiles added to oversupply concerns while Russia failed to initiate further production cuts in January. According to energy ministry data Russia’s February oil output was unchanged from January at 11.1 million barrels per day (bdp), with cuts remaining at 100,000, which is well below the production cuts pledged by Russia in a deal with OPEC last November. In November last year, The OPEC and other producers, including Russia agreed to cut output by about 1.8 million bpd in an effort to combat the supply and demand balance that has pressured prices over the last two years.

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