LONDON: Aluminium prices were driven to a 10-year high on Thursday by growing concern that restrictions on production of the metal in China are squeezing supply.
Benchmark aluminium on the London Metal Exchange (LME) was up 0.1% at $2,692.50 a tonne at 1612 GMT having earlier reached $2,734.50, its highest since May 2011. Lower Chinese output is transforming a market that was amply supplied for years, said independent analyst Robin Bhar.
“We’re seeing inventories coming down to try to fill the gap between supply and demand,” he said, predicting that prices would rise above $3,000.
MARKETS: Record-setting world stocks moved higher after jobless claims data suggested the US labour market was charging ahead.
CHINA OUTPUT: More than 2 million tonnes of China’s annual aluminium capacity - 6% of the total - has been shut down this year and that number could rise, said research house Antaike.
China produces more than half the world’s supply of primary aluminium. Several local governments have restricted aluminium makers’ electricity consumption or metal production because of tight power supplies and pressure to reduce pollution.
COLUMN: China is battling with aluminium’s decarbonisation paradox, writes Reuters columnist Andy Home.
INDIA: Shortages of coal at several power plants in India could also curtail energy supply to aluminium smelters, cutting their production, ING analysts said.
STOCKS: Aluminium inventories in LME-registered warehouses fell from almost 2 million tonnes in March to 1.3 million tonnes last month, before rising slightly.
SPREAD: Cash LME aluminium has flipped from a premium against the three-month contract to a small discount, signalling that supply constraints have eased.
STRIKE: Two unions at Chile’s Andina copper mine have reached a labour contract deal, ending a strike that began in mid-August.
OTHER METALS: Benchmark LME copper was up 0.5% at $9,378 a tonne, zinc rose 0.1% to $2,983, nickel added 0.4% to $19,400 and lead gained 1.4% to $2,305.50. Tin was down 0.2% at $33,470.
Comments
Comments are closed for this article.