LONDON: Aluminium prices rose on Friday and were set for their biggest weekly gain since April after news of the closure of a plant producing key raw material alumina in Brazil raised concerns of potential shortages.
Most other industrial metals fell sharply, however, as a spike in US Treasury yields, a global equity sell-off and a stronger dollar - which makes metals more expensive for buyers with other currencies - turned financial investors negative.
"Aluminium's supply-demand factors have come to the fore," said Societe Generale analyst Robin Bhar, adding that other metals were caught up in the wider de-risking on global markets.
ALUMINIUM: Benchmark aluminium on the London Metal Exchange (LME) was up 0.7 percent at $2,185 a tonne at 1031 GMT after reaching $2,267, the highest since June, on Thursday.
It was up 8 percent this week, the biggest weekly rise since April.
TECHNICALS: Aluminium was hovering above support at its 200-day moving average at $2,163 and a Fibonacci level at $2,173.
ALUMINA: Analysts were unsure how long a shutdown would last at Norsk Hydro's Alunorte alumina refinery, the world's largest, after the Brazilian state of Para said it had been surprised by the closure and asked for an explanation.
"There is growing noise in the market ... that the decision to fully shut operations was a tactic to put pressure on authorities, who up until now had restricted production to just 50 percent of capacity," ING analysts said in a note.
STOCKS: Lower inventories suggest a less well-supplied market, with aluminium stocks in LME-certified warehouses slipping to 966,900 tonnes, the lowest since 2008, and ShFE warehouses holding 832,256 tonnes, down from just under 1 million tonnes in May.
SPREAD: Another signal of tightness was a narrowing of the discount of cash aluminium over the three month contract to $1.50 from almost $40 a month ago.
METALS PRICE OUTLOOK: Signals pointing to potential shortages across industrial metals have been submerged by uncertainty about how metals demand will be hit by trade wars, rising US interest rates and a slowdown in China.
"The fundamental data, which are being largely ignored at present, justify higher prices (for metals)," analysts at Commerzbank said in a note on Friday.
The LME's index of six industrial metals is down 13 percent from the June high.
CHINESE MARKETS: China's markets are shut for the week-long National Day holiday.
OTHER METALS: LME copper was down 1.9 percent at $6,175.50 a tonne, zinc was 1.1 percent lower at $2,625.50, nickel fell 0.5 percent to $12,430, lead slipped 0.7 percent to $1,993 and tin was flat at $18,970.
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