LONDON: Aluminium and other base metals climbed on Wednesday as tensions eased between Russia and the West over Ukraine and focus shifted to an energy crunch causing smelter shutdowns, mainly in China and Europe.
Three-month aluminium on the London Metal Exchange (LME) gained 1.4% to $3,253 a tonne by 1700 GMT. The lightweight material used in transport and packaging is the most energy-intensive metal to produce.
“I think it’s mainly a relief rally from the calming geopolitical situation,” said Xiao Fu, head of commodity market strategy at Bank of China International.
“Aluminium still stands out because of the power issue, even though the Russia-Ukraine situation has calmed down, the energy and gas markets are still fairly tight and oil prices are at elevated levels.”
World stocks and other financial markets were upbeat after Moscow announced a partial pullback of troops from Ukraine’s borders, even though the West was sceptical.
Investors were waiting for the Federal Reserve’s January policy meeting minutes that are due to be released later in the day. Financial markets have priced in a better-than-even chance that the Fed will raise interest rates next month by half a percentage point.
LME copper rose 0.3% to $10,002 a tonne, nickel gained 0.6% to $23,425, lead climbed 1.6% to $2,344.50, zinc added 0.3% to $3,593 and tin advanced 0.5% to $43,615.
Baise city in the aluminium producing region of Guangxi in China on Tuesday lifted lockdowns imposed last week to fight rising COVID-19 infections, according to a government notice. China’s factory-gate inflation cooled to its slowest pace in six months in January, official data showed on Wednesday, as government measures to control surging raw material costs weighed on producer prices.