Much to our surprise Chinese producers have, on paper at least, shown reasonable restraint in keeping Q4 2015 idled capacity offline through the first half of 2016. Together with some stability in key Chinese end use markets on the back of short term stimulus measures, market sentiment improved, dragging prices off their early 2016 lows. Indeed, The Q2 LME cash price average currently stands at $1,562/t versus $1,515/t in Q1. Prices during the latter part of June have been hovering above $1,600/t driven by a weaker US dollar and receding fears over the UK exit from the EU. Our concern is that the mildly positive demand tone in China will mostly likely be short lived while China continues to add new low cost capacity, incentivised by recent price stability. With demand growth projected to slow over the next few years we expect multi year surpluses through 2019 in a market saddled with historically high inventory levels.