LONDON: Aluminium steadied on Friday after its biggest one day increase in nearly three months a day earlier as investors reassessed concerns about capacity cuts in top producer China.
An industry association said last month that China would launch a crackdown to curb the illegal expansion of aluminium capacity and Chinese media on Thursday reported significant shutdowns were in the pipeline.
But offsetting these closures, later reports indicated new capacity was coming on stream.
"The China story is priced in. They're (also) bringing new capacity online which is more efficient. We don't expect to see the aluminium market rally significantly from these levels. We have it averaging $1,950 in the fourth quarter," said Warren Patterson, Commodities Strategist at ING.
ALUMINIUM PRICES: Three-month London Metal Exchange aluminium ended up 0.2 percent at $1,927 a tonne, having gained 1.7 percent in the previous session.
"While production may be reduced in China, it is being expanded elsewhere. In the US for example, a smelter with a capacity of a good 160,000 tons per annum looks set to go back into operation next year," Commerzbank said in a note.
ZINC: Zinc fell 0.6 percent to $2,786 a tonne as warehouse inventories monitored by the Shanghai Futures Exchange jumped 16.2 percent from last Friday to 77,786 tonnes.
Also, LME data showed a 28,500 tonne, or 41 percent, daily increase in "on-warrant" or available inventory.
Nickel ended 4 percent higher at $9,580 a tonne, its strongest daily percentage gain since November.
Philippine President Rodrigo Duterte promised on Wednesday to resolve an impasse caused by a ministerial order to close more than 20 mines in the world's top source of nickel ore, but told miners to end practices that damaged the environment.
COPPER: LME copper ended up 0.9 percent at $5,926 a tonne, helped by encouraging economic reports from top consumer China and as weak US consumer prices and retail sales data dimmed chances of another rate rise this year.
CHINA SPENDING: China's fiscal spending jumped 19.1 percent in June from a year earlier, quickening sharply from a 9.2 percent rise in May and signalling government efforts to cushion a gradual slowdown in the economy.
COPPER SUPPLY: Chile's Antofagasta has reached a new wage agreement with supervisors at its Centinela copper mine, defusing the risk of a strike amid a volatile labour environment in the South American country.
OTHER METALS: Lead closed up 1 percent at $2,316 while tin closed flat at $19,810.
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