Prospect of stronger demand propels aluminium towards 7-month high

Aluminium prices rose on Monday towards 7-month highs as stronger economic growth and demand in Europe and elsewhere raised the prospect of rising exports of the metal from top producer China.

Benchmark aluminium on the London Metal Exchange traded up 0.9% at $1,803.5 a tonne in official rings.

Prices of the metal used in the construction and transport industries touched $1,824 a tonne last week, the highest since January and a rise of 25% since the middle of May.

"Outside China, construction projects are restarting and consumers who have been destocking will need to buy aluminium," said BMO analyst Timothy Wood-Dow.

"Western economies will to have to buy from China, a typical exporter of aluminium, which will charge a premium and that will pull benchmark prices higher."

IMPORTS: China's July aluminium imports leapt nearly sevenfold year-on-year to their second-highest level on record, as the world's top exporter of the metal turn net importer for the first time since 2009.

China is the world's largest producer and consumer of aluminium.

EXPORTS: China's exports rose for the third consecutive month in August as more of its trading partners relaxed coronavirus lockdowns in a further boost to the recovery in the world's second-biggest economy.

The data boosted sentiment overall in industrial metals markets, pushing copper up to $6,822.5, within a whisker of the 26-month high seen last week.

It was last up 0.9% at $6,772 a tonne.

INVENTORIES: Copper stocks in LME approved warehouses at 77,550 tonnes are at their lowest since 2005 and down more than 70% since the middle of May.

Historically low copper stocks combined with large holdings of copper warrants over the past couple of months have fuelled worries about supplies on the LME market.

This is why the premium for the cash over the three-month rose above $30 a tonne at the end of August, the highest since March last year. It was last at $18.50.

OTHER METALS: Zinc was up 0.1% at $2,485 a tonne, lead gained 0.7% to $1,986.5, tin was down 0.3% to $18,190 and nickel slipped 0.4% to $15,229.