Aluminium climbs to three-week high as tightness back in focus

LONDON: Aluminium rose for a fifth straight session on Thursday, touching its highest in three weeks on continued supply tightness and a slight improvement in economic risk sentiment that also boosted other industrial metals.

Benchmark three-month aluminium on the London Metal Exchange was up 0.4% at $3,298 a metric ton by 0910 GMT. The metal earlier hit $3,306.50 for its highest since August 13.

“Aluminium is supported by physical market tightness and expectations of firmer seasonal demand in China,” said ING commodities strategist Ewa Manthey.

LME aluminium stocks of 245,975 tons are the lowest since 1990. In top metals consumer China, Shanghai Futures Exchange inventories have fallen for 11 weeks running from a six-year high of 528,885 tons on June 12 to 391,498 tons.

Analysts expect the aluminium market to remain in deficit this year despite hopes for returning supply from smelters in the Middle East, which accounts for about 9% of global capacity.

Copper, zinc fall as strong dollar weighs on industrial metals

Copper climbed 0.4% to $14,268.50 a ton as the LME complex was boosted by a weaker dollar and fading expectations of a September increase to U.S. interest rates. A weaker U.S. currency makes dollar-denominated metals more affordable for holders of other currencies.

The copper curve remained in backwardation, indicating near-term tightness, but the premium on the cash contract over the three-month forward has narrowed to $93 a ton, from more than $500 on August 17, as available stocks have edged higher.

Backwardation is a market structure where the price for prompt delivery is higher than prices of future contracts.

Zinc, meanwhile, eased 0.2% to $3,855 after striking a four-year high near the $4,000 mark on Tuesday.

The three-month zinc backwardation has narrowed to $85 from more than $200 in late August, with 9,975 tons of deliveries into LME warehouses on Wednesday somewhat easing the tightness. Available, or on-warrant, LME zinc inventories now stand at 80,225 tons.

One entity holds more than 90% of the LME zinc warrants and cash contracts, exchange data shows, giving it a high degree of control over nearby physical supply.

Elsewhere, lead gained 0.3% to $1,900 a ton and tin added 0.5% to $54,435 while nickel shed 0.7% to $16,800.