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Aluminium has surged on the bullish appetite for commodities but even excluding Chinese tightening and waning risk appetite, many metrics suggest the market has overshot.

In mid-February Beijing estimated overcapacity in its domestic smelting industry was as high as seven million tonnes in 2010, saying it would 'encourage' consolidation.

Inventories are already at near-record levels, at 4.5 million tonnes. BlackRock Global Mining chair John Robinson said the alloy was currently one of the few metals with poor fundamentals.

'The aluminium sector we are less favourable towards,' said Robinson. 'It looks like it will suffer for some time from a supply imbalance.'

The global importance of cotton was underlined when the World Trade Organization last week gave Brazil rare approval to launch import tariffs against the US over unfair agricultural subsidies.

A full-scale 19th century-style trade war adds to recent pricing pressure. The leading cotton exchange saw spot prices rise from 75 cents a pound to 85 cents in February.

Short-term pricing was supported by longer term fundamentals, with reduced production and rebounding mill use projected to reduce global supplies 15% in 2010.

The opportunity is expected to fade into the last quarter of the year as producers have the potential to bring spare capacity back into production for the 2010 growing season.

Citywire