Aluminium trades near one-month high on signs of tighter LME market

LONDON: Aluminium climbed to a one-month high on Wednesday as signs of a rise in demand caused by a fall in inventories on the London Metal Exchange (LME) attracted buyers.

Three-month aluminium on the LME closed 1.4 percent up at $1,909 a tonne after touching its strongest since Dec. 24.

BMO Capital Markets analyst Colin Hamilton said the decline in LME stocks is likely to be down to traders taking advantage of the geographical arbitrage rather than a sudden surge in industrial demand.

"Aluminium is a market in deficit, but the fact that you have seen (higher cancelled warrants) has triggered some CTA buying," he said.

Cancelled warrants or material earmarked for delivery in LME-approved warehouses, surged to 94,300 tonnes, accounting for 31 percent of the total 1.3 million tonnes.

TRADE WAR: As much as U.S. President Donald Trump wants to boost markets through a trade pact with China, he will not soften his position that Beijing must make real structural reforms, including how it handles intellectual property, to reach a deal, advisers say.

CHINA ALUMINA: China's December exports of alumina, the raw material for making aluminium, fell by 37.9 percent from the previous month to 177,430 tonnes, government data showed.

China's aluminium producers flagged an 800,000-tonne cut in smelting capacity in the coming months.

"As we start 2019, prospects for global (aluminium) demand are taking centre stage in defining price direction," Wood Mackenzie said in its outlook for the year.

"How demand fares against the background of softer global economic growth will be a key feature of the aluminium market over the next 12 months."

STIMULUS: China will step up spending this year to support its economy, focusing on further cuts in taxes and fees for small businesses, finance ministry officials said on Wednesday.

CHINA COPPER: China's December refined copper output rose by 4.5 percent year on year to 839,000 tonnes, its highest monthly total in 2018, the National Bureau of Statistics said on Wednesday.

NICKEL: The global nickel market deficit narrowed to 4,900 tonnes last November from the previous month's revised deficit of 10,600 tonnes, the International Nickel Study Group said.

OTHER METALS: LME copper closed 0.3 percent up at $5,951.50 a tonne, zinc added 1.4 percent to $2,620, lead gained 0.3 percent to $2,027, tin finished 1.3 percent up at $20,700 and nickel added 1 percent to  $11,700.