Aluminium climbs

LONDON: Aluminium prices rose to their highest in almost 20 days on Wednesday as news of alumina shortages triggered systematic buying from funds.

Three-month aluminium on the London Metal Exchange rose 1.6% to $2,674.5 a metric ton as of 1600 GMT, after touching its highest since Oct. 3 at $2,684.

It outperformed the rest of the metals complex which came under pressure from a stronger US dollar, making dollar-priced metals more costly for buyers with foreign currencies. “Alumina’s sharp rally onshore and particularly since early September has shifted the narrative on aluminium,” said Alastair Munro, senior metals strategist at brokerage Marex.

Prices of alumina, the main ingredient for making primary aluminium, have rallied 17% in China this month due to upstream disruptions in Australia and Guinea.

The most traded front-month alumina contract on the Shanghai Futures Exchange closed at 4,937 yuan after hitting a record high of 5,003 yuan in the previous session.

With input costs rising, Munro had seen more aluminium buying by funds known as commodity trading advisors, largely driven by computer programmes.

But questions remain over whether demand for aluminium, widely used in car making and packaging, is solid enough to keep prices at these levels.

“Aluminium consumers having been living on a hand-to-mouth basis amid a higher cost to hold inventory and particularly given future demand uncertainty,” Munro added.

LME data showed one large futures position at more than 40% of open interest to buy aluminium in December and a large position of 30%-39% of open interest to sell in January. In other metals, zinc rose by 0.2% to $3,143. It earlier rose to a 15-day high of $3,168.

Speculators have been building up positions in LME zinc futures and options, betting technical tightness will translate into a rally in coming weeks.

Meanwhile copper lost 0.5% to $9,532 a ton, nickel was down 0.1% at $16,310, lead fell 0.2% to $2,065 and tin was up 0.4% at $31,020.