LONDON: Aluminium prices on the London Metal Exchange (LME) on Thursday hit a three-week high, driven by expectations of solid demand and signs of tighter supply. Benchmark three-month aluminium was up 1.3% at $1,806 a tonne at 1608 GMT after touching $1,808, the highest since Sept. 15.
The metal, used in packaging and transport, has rebounded from a low of $1,455 in April, when the novel coronavirus spread globally, but prices are slightly below January's highs.
"There is better demand coming through, and a bit more optimism," independent analyst Robin Bhar said, adding that although the market was oversupplied, the surplus was being locked up in financing deals, leaving room for further rises.
Chinese markets are closed until Friday for a week-long national holiday, reducing trading activity. The discount of cash aluminium against the three-month contract on the LME touched $12.80, the lowest since March, from $37 a week ago, pointing to tighter nearby supply.
Aluminium for Friday delivery traded as much as $9 above metal for Monday delivery, the biggest 'tom-next' spread since July. On-warrant aluminium in LME-registered warehouses at 1.1 million tonnes are down from almost 1.5 million tonnes in June but above typical levels for 2018 and 2019 of around 800,000 tonnes.
Swedish aluminium producer Granges said it expected third-quarter operating profit and sales volumes to exceed market expectations. China's aluminium import boom heralds a deeper rift in the market, writes Andy Home.
Speculators hold roughly equal bets on higher and lower aluminium prices on the LME, brokers Marex Spectron said. German exports rose for the fourth month running and by more than expected in August.
Equities markets gained.
LME copper was up 0.1% at $6,683 a tonne, zinc rose 0.9% to $2,377.50, nickel gained 0.4% to $14,665, tin was up 0.1% at $18,135 and lead was down 0.5% to $1,794.
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