LME aluminium crawls up on Ukraine crisis, China demand worries cap gains

London aluminium prices edged higher on Tuesday, buoyed by lingering supply concerns triggered by the Russia-Ukraine conflict, although the gains were capped by demand worries in top metals’ consumer China on soaring COVID-19 cases.

Three-month aluminium on the London Metal Exchange rose 0.7% to $3,341 a tonne by 0241 GMT, after having fallen 4.7% on Monday.

The most-traded April aluminium contract on the Shanghai Futures Exchange fell 0.8% to 21,720 yuan ($3,407.33) a tonne.

Russian and Ukrainian delegations held a fourth round of talks on Monday but no new progress was announced. Discussions were due to resume on Tuesday.

Meanwhile, European Union member states agreed on a fourth package of sanctions against Russia.

Russia produces about 6% of the world’s aluminium, 7% of global nickel and accounts for about 3.5% of copper supplies.

Easing supply concerns, demand doubts weigh on base metals

The LME will resume trading of nickel contracts at 8 a.m. London time on Wednesday March 16, after trading was halted a week back following unprecedented surge in prices.

Fundamentals

• LME copper rose 0.4% to $9,975 a tonne, lead eased 0.1% to $2,265, zinc inched 0.1% lower to $3,805 and tin was up 0.4% at $42,755.

• ShFE copper fell 0.4% to 71,690 yuan a tonne, zinc eased 0.5% to 25,290 yuan, lead dropped 1.3% to 15,055 yuan and tin was 2.2% lower at 328,530 yuan, while nickel climbed 8% to 213,500 yuan.

• Mainland China posted a steep jump in daily COVID-19 cases on Tuesday, with new symptomatic cases more than doubling from a day earlier to a two-year high as a virus outbreak expanded rapidly in the country’s northeast.

• China’s aluminium production fell 1.4% in the first two months of 2022 from the corresponding period last year, official data showed on Tuesday.

• China’s Tsingshan Holding Group has reached an agreement with banks under which they will not make margin calls on or close out the producer’s nickel positions on the LME, the company said on Monday, a move sources said should help calm the market.

• Southern Copper Corp’s Cuajone mine in Peru has suspended operations since Feb. 28 due to a protest by local communities who cut the company’s water access and blocked a key railroad, Peru’s mining chamber SNMPE said on Monday.

• Rio Tinto, proposed on Monday to buy the 49% of Canada’s Turquoise Hill it does not already own for about $2.7 billion, paving the way for direct ownership of the massive Oyu Tolgoi copper-gold mining project in Mongolia.