Network Metals LLC

Chinese reserve buying continues today as Central Henan Province has announced its intention to purchase 500,000 tons of aluminum for its reserves. Central Henan Province is China’s largest primary aluminum producer, and so far almost 40% of its smelters have ceased production during the aluminum downturn, which has been perhaps the worst out of all the base metals. But the Central Henan plan of bringing in aluminum reserves and possibly subsiding energy prices is in the same mold as most of the other Chinese government interventions into the sector. Since primary aluminum production is particularly energyintensive, the energy subsidies for aluminum smelters in the Henan province, already present, will carry special significance down the road as aluminum continues to suffer.