LONDON: Aluminium prices fell to a two-week low on Thursday as a decline in the equities market hit sentiment towards base metals and offset support from improved demand prospects in China, the world’s largest aluminium producer.
Benchmark aluminium on the London Metal Exchange was down 0.4% at $2,838.50 a metric ton by 1619 GMT, after hitting $2,831.5 for its lowest since October 23.
The metal was rising earlier in the session before changing direction mid-day as Wall Street’s main indexes fell with technology stocks coming under fresh selling pressure.
“U.S. government shutdown and paucity of data also raises prospect of risk aversion ahead of the Fed’s rates decision in December let alone the fact we are into the back end of the trading year,” said Alastair Munro, senior metals strategist at Marex.
Providing support to aluminium, which touched $2,920 on Monday, its highest since May 2022, was strong demand with China’s market growing tighter, said Neil Welsh, head of metals at Britannia Global Markets.
Fund money has surged into the LME aluminium contract over the past couple of months as investors bet that the market’s days of chronic oversupply are coming to an end with production in China running up against the government’s capacity cap.
The European aluminium premium, which buyers on the physical market pay over the LME price, rose to $328 from $183 in June. It hit $330 at the start of the month for its highest since February.
The rebound in the premium is led by easing pressure from Canadian primary metal on the European market and expectations of costs related to the EU’s carbon border adjustment mechanism (CBAM), Morgan Stanley said in a note.
Among other LME metals, copper lost 0.2% to $10,678.50 a ton. The metal hit a record high of $11,200 last week on worries about tighter global supply.
Zinc gained 0.1% to $3,046, lead firmed by 0.5% to $2,028.50 and tin rose 0.4% to $35,750, while nickel was steady at $15,035.
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