, Columnist
Aluminum's Chinese Illusion
Supply is the culprit as Beijing tightens commodity-trucking rules.
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Something very strange is happening in China's metal markets. Buyers appear to be behaving the way U.S. shoppers do at this time of year: queuing up and pushing to get their hands on some product before anyone else can get a chance.
Aluminum has been in a state of backwardation on the Shanghai Futures Exchange for several months. That condition -- where contracts for near-term delivery cost more than longer-term ones -- is normally seen as an indicator of tight markets and fundamental demand. Sure enough, deliverable stocks of aluminum in exchange-monitored warehouses are bumping along close to their lowest levels in nine years -- but a demand-surge story still doesn't make a lot of sense.