Aluminium gains on concern about Chinese supply
- Three-month aluminium on the London Metal Exchange was up 0.3% at $2,219 a tonne.
- Decarbonisation and moving to the carbon neutral target will be a key focus at the two sessions in Beijing this week so that's why aluminium and steel would be in the spotlight because they are energy intensive industries.
LONDON: Aluminium prices pushed towards recent highs on Wednesday on worries that biggest producer China may curb output to meet its ambitious goals to slash greenhouse gases.
Three-month aluminium on the London Metal Exchange was up 0.3% at $2,219 a tonne by 1135 GMT after coming within a whisker of last week's peak of $2,243, the strongest since October 2018. The contract jumped 3.9% on Tuesday.
Investors were jittery ahead of China's annual meeting of parliament, known as the "two sessions", which kicks off in Beijing this week, where China will announce goals for 2021 as well as its next five-year plan for economic development.
"Decarbonisation and moving to the carbon neutral target will be a key focus at the two sessions in Beijing this week so that's why aluminium and steel would be in the spotlight because they are energy intensive industries," said Xiao Fu, head of commodity market strategy at Bank of China International.
China's Inner Mongolia, a major aluminium producing region, will stop reviewing new projects in industries that consume large amounts of energy, including aluminium, as it attempts to meet energy efficiency targets.
"But we need to see the broader trend in China's policies. Inner Mongolia is only one province so we also need to see whether other key aluminium producing regions such as Shandong or Xinjiang are doing something similar," Fu added.
Shanghai aluminium prices rose to a near 9-1/2-year high on Wednesday, with the most-traded April aluminium contract on the Shanghai Futures Exchange ending 4.2% higher at 17,640 yuan ($2,729.09) a tonne.
"Aluminium supplies are already tight ... every physical customer is asking around for aluminium warrants at the moment," a Singapore-based trader said.
LME copper rose 0.5% to $9,212 a tonne, zinc shed 0.3% to $2,843.50, lead fell 1.4% to $2,051.50, nickel dropped 1.4% to $18,415 and tin gained 1% to $24,535.
The US aluminium premium was last at $364 a tonne, easing from its highest since November 2019 of $365 a tonne hit on Monday, as the United States issued final anti-dumping duties on common alloy aluminium sheet from 18 countries.
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