LONDON: Aluminium prices powered to a 13-year high on Wednesday on supply concerns triggered by production disruptions in top producer China and robust demand.
China’s aluminium and alumina hub Guangxi was going ahead with measures reported last week requiring smelters to keep September output at a maximum of 80% of average monthly levels in the first half of 2021, and alumina refineries to stay within 50%, according to consultancy Aladdiny.
China aims to lower its carbon output by restricting the electricity consumption and production of power-intensive industries such as aluminium smelting.
Power constraints faced by smelters in China are part of a long list of issues in the aluminium supply chain including a coup in major bauxite producer Guinea and a fire at the alumina operations of Noble in Jamaica, among others.
“If China is serious about good environmental outcomes and decarbonisation, then (aluminium) output will be slower,” said WisdomTree analyst Nitesh Shah.
Three-month aluminium on the London Metal Exchange climbed 1.4% to $2,795 a tonne by 1410 GMT, after touching a high of $2,810. This was the highest since August 2008.
In Shanghai, the metal hit a more than 13-year high of 22,075 yuan ($3,416.18) a tonne.
BACKLOGS: Imports shipment backlogs ahead of the Oct. 1-7 holiday in China added to tight supply, with aluminium inventories in Shanghai Futures Exchange (ShFE) warehouses at their lowest since December.
On-warrant LME inventories of aluminium those not earmarked for delivery, at 854,725 tonnes, were near their lowest since March 2020.
One party has control of 50%-80% of LME inventories, data showed on Wednesday.
Funds have raised bullish bets on aluminium on SfHE and on LME since August, according to estimates by broker Marex.
Macquarie revised its 2021 market balance from a surplus of 530,000 tonnes to a deficit of 700,000 tonnes, and expects persistent deficits through 2025.
The bank also expects global demand to rise more than previously expected.
LME copper fell 0.7% to $9,287 a tonne, zinc rose 1.3% to $3,082, lead added 0.3% to $2,282, tin was up 0.2% to $32,145 while nickel climbed 0.8% to $19,660.