LONDON: Aluminium prices pulled back from their highest levels in more than 13 years on Thursday after a surge in inventories raised the prospect that supplies are not as tight as feared.
Copper and other base metals were buoyant after strong US inflation data spurred investors to scoop them up to hedge against rising prices.
Three-month aluminium on the London Metal Exchange had slipped 0.5% to $3,250 a tonne by 1715 GMT after touching its highest since July 2008 at $3,333.
An energy crunch and Chinese efforts to curb pollution has led to smelter closures and worries about dwindling inventories.
But new arrivals in LME warehouses sent on-warrant stockpiles soaring by 42% to 595,150 tonnes, data showed on Thursday.
“There’s more to the story than what we can see on the LME and Shanghai in terms of warehouse stocks,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“We’re getting close to the record highs in aluminium, but the market needs to be convinced that the fundamentals are strong enough to carry it even higher.”
LME aluminium hit a record of $3,380.15 in 2008.
Other industrial metals were strong, supported after US consumer prices rose solidly in January, leading to the biggest annual increase in inflation in 40 years.
“That makes commodities a space that is attractive, not only due to the fundamentals, which are showing tightness, but also their ability to safeguard returns in an inflationary environment,” Hansen added.
New bank lending in China more than tripled in January from the previous month, beating forecasts and hitting a record high, as the central bank seeks to shore up slowing growth in the world’s second-largest economy.
LME copper gained 1.8% to $10,242 a tonne after LME inventories fell to a two-month low of 76,325 tonnes.
“Copper held on major exchanges is now at alarming levels, representing just three days of global supply,” ANZ strategists said in a note.
LME zinc advanced 1.5% to $3,697.50 a tonne, nickel climbed 1.2% to $23,465, lead rose 1.7% to $2,282.50 while tin gained 2.5% to $44,195 after touching a fresh record high of $44,276.
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