Aluminium hits two-week low on weak Chinese data and momentum signals

LONDON: Aluminium prices fell to a two-week low on Monday after data showed factory activity in top consumer China slowed further in August. Three-month aluminium on the London Metal Exchange fell as low as $2,411 a metric ton, its weakest since Aug. 19, and was 1.3% down at $2,415 during official rings.

China’s manufacturing data sank to a six-month low last month, with owners struggling for orders, an official manufacturing survey showed on Saturday. The country’s real estate sector and automakers are the biggest users of aluminium.

Despite an improvement in economic numbers from the rest of the world, China’s bearish data still carries more weight in determining metals demand, said Dan Smith at Amalgamated Metal Trading. Aluminium had been pressured since late August by holders of long positions closing out their trades, he added. Algorithmic computer models that place buy and sell orders largely on momentum signals had flipped from buy to sell aluminium, Smith said.

In other metals, the premium of cash tin prices over the three-month contract almost doubled from Friday to $290 a ton.

This condition, known as backwardation, typically points to tighter supply. Tin was last down 3.5% at $31,200. The closure of Yunnan Tin’s smelter for maintenance, announced last week, is expected to draw down tin inventory in China, the analyst said. Tin stocks at warehouses monitored by the Shanghai Futures Exchange stood at 10,811 tons last Friday. Among other metals, three-month copper on LME was down 0.9% at $9,152 a ton, nickel lost 0.8% to $16,640, zinc slid 2.2% lower to $2,834 and lead eased by 0.2% to $2,048.