LONDON: Aluminium prices fell on Monday after a jump in available stocks in warehouses registered with the London Metal Exchange (LME) and Chinese data that showed rising output of the metal.
Benchmark three-month aluminium on the LME was down 1.5% at $2,444.50 a metric ton by 1400 GMT. On-warrant aluminium stocks in the LME system rose to 343,025 tons for their highest since December after 92,950 tons were put back on warrant, a title document that confers ownership, daily LME data showed.
The operation known as reverse cancellation reduced cancelled warrants to 12.8% of total aluminium stocks, unwinding concerns about availability of the metal in the LME system ahead of the expiry of contracts this week. The spread between the cash contract and three-month aluminium was last at a discount of $2 a ton on Monday, compared with a $6 premium on Friday. Adding further pressure, data showed that China, the world’s largest metals consumer, increased aluminium production by 3.4% to 14.8 million tons over the January-April period.
Sentiment was also hit by slowing growth in China’s factory output and retail sales numbers that missed expectations while stagnation in new home prices continued.
On the technical front, LME aluminium is supported by the 21-day moving average at $2,435. There was also some support from a 4.5% rise in alumina prices on the Shanghai Futures Exchange to their highest since March on concerns about future supplies of raw material bauxite from Guinea.
Last week’s decision by Guinea’s military government to take back 51 mining licences involving bauxite, gold, diamond and graphite concessions, adds to growing uncertainty surrounding mining operations in Guinea, Citi said in a note. LME copper rose 0.7% to $9,514 a ton as the dollar fell against a range of currencies.
A weaker US currency makes dollar-priced metals more attractive for buyers using other currencies. Zinc edged down 0.3% to $2,684 a ton, lead fell 1% to $1,980, nickel lost 1.2% to $15,465 while tin added 0.3% to $32,925.
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