In recent weeks investors have grown sceptical of the potential price impact of environmental related production cuts following firm growth in Chinese production. High SHFE prices have incentivised Chinese smelters to boost production by 11% between January and May year to date. As a result LME cash prices consolidated during June staying below $1900/t level for the large part of the month. During the last week of June prices touched $1855/t falling to the lowest level since mid March. In the absence of more definite producer discipline coming out of China we expect LME prices to ease towards the $1800/t level in the second half of 2017. That said prices could well turn in the opposite direction if the protectionist measures against Chinese exports and output restraint due to an unauthorised new capacity and pollution related cutbacks take place.