Chinese New Year- Year of Monkey

It is the year of Monkey in 2016 based on the Chinese Lunar Calendar. Monkey is the 9^th animal sign in the Chinese Zodiac. Monkey is a clever and lively animal. The monkey was thereby bestowed with an auspicious and dignified meaning. That is how we wish for the aluminium and carbon industry in the year Monkey.

In 2015, both the aluminium and carbon markets had a hard time. Both industries experienced price drops and excess production capacity problem.

In early 2016, six major aluminium enterprises had organized to do 1mt stockpiling to save the aluminium market. This will not cause any significant shift in the market dynamics, in our opinion. The market needs to shut down excess capacity instead, if they want to solve the problem.

Chinese aluminium may face anti-dumping actions from other countries, especially as China takes the Yuan weaker against the US dollar. Bauxite and alumina import costs will rise for the same reason, but the international market is watching carefully what will happen with China’s metal exports in 2016.

On the demand side, China tried to save the house market this week by reducing the loan down payment to around 25% in some cities. It may reduce inventory in the real estate market, but it is hard to see how this move will stimulate the construction industry and increase demand for aluminium. The auto industry’s demand for aluminium is increasing in 2016. Every 1kg of aluminium in a car would reduce 2.25kg in dead weight. Will the car industry be a big contributor to the aluminium industry in the year of the Monkey?

For the carbon industry, perhaps this industry needs to learn from the monkey. In Chinese astrology, the monkey is a clever animal and in early dynasties the dignified Chinese official title of marquis was pronounced ‘Hou’, the same as the pronunciation of ‘monkey’ in Chinese. The carbon industry is faced with uncertainty about the new environmental laws, plus fear as smelters in China start to close. The monkey sign is not associated with characteristics of fear and doubt, rather this is the time the monkey gets clever and finds ways to win the banana. It will be interesting to see how the industry deals with the issues confronting it. Will they adopt monkey tactics?

The AZ China team wishes all our clients and readers a Happy Chinese New Year in the year of Monkey. We hope the coming year will be like the Monkey for you - acting smart and finding ways to get through the difficulties. 新年快乐！