Aluminium slides on concern over demand, new virus cases

• Benchmark aluminium on the London Metal Exchange fell 1% to $1,482 a tonne in official trading.
• Copper edged up 0.1% to $5,263.50 a tonne after touching an eight-week high on Monday.

LONDON: Aluminium slipped along with most industrial metals on Tuesday on worries about demand as new COVID-19 cases emerged in China and more data showed how global economies have been battered by the pandemic.

Chinese health authorities called for vigilance on Tuesday after Wuhan reported a new cluster of cases, while China's factory prices fell at the sharpest rate in four years in April.

"The key question is, is demand coming back? In China, things are coming back, but not back to normal yet. Outside of China is still moving very, very slowly out of lockdown," said independent consultant Robin Bhar.

"This is why metals are hesitating. To be realistic, rallies aren't really going to get established until we have a much clearer picture, and that's not going to happen in the next few days or weeks."

Benchmark aluminium on the London Metal Exchange fell 1% to $1,482 a tonne in official trading.

Copper edged up 0.1% to $5,263.50 a tonne after touching an eight-week high on Monday.

The metal, often used as a barometer of global economic health due to its broad industrial uses, has rebounded by a fifth since touching a 45-month low of $4,371 on March 19.

SHANGHAI LEAD: The most-traded lead contract on the Shanghai Futures Exchange jumped as much as 3.5% to 14,340 yuan ($2,022) a tonne, the highest since March 11, but LME lead gave up 0.7% to $1,659 a tonne.

LEAD INVENTORIES: The Shanghai price gains were fuelled after LME on-warrant lead stocks tumbled by a fifth to 56,900 tonnes, a three-week low, data released on Monday showed, indicating potential withdrawals of inventories in coming days or weeks.

Data on Tuesday, however, showed headline LME lead stocks edged up by 275 tonnes to 74,300 tonnes, the highest since last September.

CHINA STOCKS: In China, lead stocks are estimated to have risen slightly in the past weeks but were still at low levels, lending some support to prices.

"There is limited battery scrap supply in the market, as people drove less in the past months," said analyst Dina Yu of CRU Group, adding that total lead stocks in China were around 9,000 tonnes as of last week, around 500 tonnes higher than mid-April levels.

However, weak demand triggered by restrictions to curb the COVID-19 pandemic is seen putting a lid on prices of the metal used mostly in car batteries.

TIN SPREADS: The premium of LME cash tin over the three-month contract rose to $151 a tonne by Monday's close, the highest since last June, indicating tighter near-term supplies. Tin added 0.1% to $15,250 a tonne.

PRICES: LME nickel fell 0.2% to $12,332 a tonne, while zinc shed 0.5% to 2,019.