LONDON: Aluminium prices were driven higher on Monday by supply concerns after reports that smelters in top producer China were curbing production.
Three-month aluminium on the London Metal Exchange (LME) advanced 3.1% to $2,461 a tonne by 1700 GMT after slipping by 0.3% on Friday.
Aluminium output in one of China’s major producing provinces, Yunnan, is set to decline after cutbacks were ordered, analysts said.
“It looks like the market is finding some support from the pick up in aluminium prices with production being curbed further in Yunnan province,” Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said.
“There are still plenty of supply concerns underpinning metals prices.” The southwestern province of Yunnan has required electrolytic aluminium producers to further reduce their power usage because of ongoing power supply constraints, state-owned Shanghai Securities News said on Monday.
The power rationing, which amounts to about 1 million kilowatts, will cut annual production capacity by about 740,000 tonnes of electrolytic aluminium, the Shanghai Securities News cited the industrial information provider Mysteel as saying.
China’s aluminium output last year rose 4.5% from the previous year to a record high, boosted by new capacity and a relaxation of power supply restrictions.
A weaker dollar also supported metals prices, making commodities priced in the US currency less expensive for buyers using other currencies.
LME aluminium prices have been weak recently, sliding by about 8% since Jan. 26 after large gains in inventories. LME aluminium stocks have jumped by 56% over the last month.
All LME prices were stronger on Monday as additional impetus was provided by a survey showing that home sales in 16 Chinese cities rose for a third consecutive week, with more support measures and the end of Beijing’s zero-COVID policy helping to stabilise demand.
LME copper advanced 1.8% to $9,147 a tonne, its highest in more than two weeks, while zinc rose 2.5% to $3,133.
Lead surged 4.8% to $2,163, the biggest one-day gain in nearly four months, nickel jumped 4.6% to $26,985 and tin climbed 3.2% to $26,690.
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