LONDON: Aluminium prices gained on Thursday as Europe continued to grapple with a power crisis that has curtailed production of the energy-intensive metal.
Other industrial metals such as copper, however, dropped on persistent worries that a global economic slowdown would curb demand.
Three-month aluminium on the London Metal Exchange rose 1.5% to $2,305 a tonne by 1630 GMT.
About half of the European Union’s aluminium and zinc production capacity “has already been forced offline due to the power crisis”, industry association Eurometaux said.
“Energy-intensive metals could continue to outperform for the time being because electricity shortages in Europe could become more exacerbated in the winter,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International.
LME zinc, another metal that requires large amounts of energy to produce and has seen cutbacks in output, lost 2% to $3,164.50 a tonne, retreating from earlier gains.
Most metals prices were weighed down by worries that aggressive central bank rate hikes would push the global economy into recession.
“The PMIs across many European countries are falling below the 50 level and that could reduce demand for metals from the manufacturing sector. It’s a dynamic rebalancing situation,” Fu added.
She was referring to purchasing managers’ index surveys in which figures below 50 indicate contraction. Latest surveys signalled that the euro zone was heading for recession.
The head of Aluminium Bahrain said European customers were reluctant to place orders for next year due to worries about a recession.
Many investors and analysts expect the Federal Reserve will raise US rates by another 75-100 basis points next week, keeping the dollar firm and putting pressure on risky assets like commodities and equities.
Rising copper inventories pressured prices. LME on-warrant copper stocks, those that have not been earmarked for delivery, have surged by 46% over the past three weeks. LME copper shed 1.2% to $7,707.50 a tonne, nickel tumbled 4.5% to $23,125, lead dropped 2.4% to $1,915 and tin eased 0.9% to $20,995.
Comments
Comments are closed for this article.