Aluminium hits 16-month low as US withdraws Rusal sanctions

BEIJING: London aluminium prices sank to a 16-month low on Thursday after the United States said it would withdraw sanctions on Russian aluminium producer Rusal, while other metals fell on signs the US Federal Reserve would continue to hike interest rates.

Three-month aluminium on the London Metal Exchange fell by as much as 1.1 percent to $1,905.50 a tonne, the lowest since Aug. 4, 2017, and stood at $1,915.50 a tonne at 0711 GMT.

Prices had hit a near seven-year high when the sanctions were announced in April on fears of a supply shortage.

The impact on the Shanghai Futures Exchange was more muted, with the most-traded February aluminium contract slipping as much as 0.6 percent before closing flat at 13,690 yuan ($1,984.17) a tonne.

John Browning, managing director of Bands Financial in Shanghai, said he did not expect the lifting of the sanctions to affect the ShFE aluminium price as much.

"The international market and the (Chinese) market have different dynamics due to a range of conditions from environmental to production profiles," he said.

China is the world's biggest aluminium producer.

FUNDAMENTALS

* RUSAL: Rusal's Hong Kong shares rose as much as 26.8 percent to their highest since April

* LME RESPONSE: The LME said it proposed to lift its suspension on aluminium produced Rusal if US sanctions are lifted.

* VOLUMES: The Rusal news saw trade volumes in aluminium up 200 percent on the 20-day moving average, with "decent consumer demand being matched by speculative selling and residual long liquidation out of the West," Marex spectron said in a note.

* ALUMINIUM: Representatives from China's biggest aluminium producers will hold a meeting on Friday in the southern region of Guangxi to discuss slumping demand and falling prices, three sources familiar with the matter said.

* FED: The US Federal Reserve on Wednesday pushed its key overnight lending rate to a range of 2.25 percent to 2.50 percent, the fourth hike of the year, and signalled "some further gradual" increases.

* OTHER METALS: All other LME metals were lower, with copper copper slipping 0.4 percent to $5,994 a tonne. The red metal had gained 0.8 percent on Wednesday on hopes a pause in Fed rate hikes would boost demand. ShFE copper fell as much as 1.3 percent to 47,760 yuan a tonne, the lowest since Sept. 17, and ended down for a sixth day at 48,220 yuan.