Shanghai aluminium jumps over 3% on supply concerns, stimulus hopes

Aluminium prices in Shanghai jumped more than 3% on Friday, as coronavirus-induced restrictions in key producer China fuelled supply concerns, while market sentiment was also buoyed by expectation of more economic support.

The most-traded April aluminium contract on the Shanghai Futures Exchange had gained 3.2% to 22,795 yuan ($3,588.58) a tonne by 0540 GMT. Prices were up 3.8% for the week, heading for their biggest gain in five.

Three-month aluminium on the London Metal Exchange (LME) rose 1.2% to $3,425.5 a tonne, but was down 1.7% so far in the week.

Aluminium rises on China stimulus hopes; nickel chaos continues

“Lockdowns in cities could impact aluminium production in China,” said ANZ analyst Soni Kumari, adding the metal was also supported by Russian supply chain disruptions, higher energy prices, Chinese emission curbs and Europe’s energy crisis.

China has lately been battling its worst COVID-19 outbreak since the virus first emerged in Wuhan in 2020, prompting authorities to impose restrictions on business activities and cargo transport in major cities such as Shenzhen.

However, investors have found solace from China’s pledge to roll out market-friendly policies to support the economy.

Meanwhile, Tokyo and Canberra announced separate measures sanctioning Russian individuals and organisations, including two oligarchs with links to Australia’s mining industry.

Fears Russia’s invasion of Ukraine and mounting sanctions on Moscow would disrupt metal flows and raise the cost of gas have boosted metal prices, with aluminium hitting an all-time high of $4,073.50 on March 7.

Fundamentals

• LME copper rose 0.4% to $10,284.5 a tonne, lead was up 0.8% at $2,268.5, zinc was 0.8% higher at $3,854 and tin climbed 1.7% to $42,420.

• ShFE copper rose 1.2% to 73,110 yuan a tonne, lead was up 0.4% at 15,260 yuan, zinc gained 0.6% to 25,565 yuan, and tin climbed 2.9% to 337,400 yuan, while nickel fell 1.3% to 207,290 yuan.

• LME’s benchmark nickel contract slumped to its daily limit for the second day in a row on Thursday and traders said it would probably continue to slide until it reached parity with the price of the metal in China.

• China’s refined copper production in the first two months of 2022 rose 4.5% year-on-year to 1.7 million tonnes, data from the National Bureau of Statistics showed.