LONDON: Aluminium prices rose on Thursday, helped by prospects of improved demand and limited output growth in China, the world’s largest producer.
Benchmark aluminium on the London Metal Exchange was up 0.7percent at USD2,871 a metric ton in official open-outcry trading. The metal hit USD2,920 on Monday for its highest since May 2022. “Aluminium is sat around this year’s highs as tight supplies and strong demand support prices, 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 to cover taxes, freight and handling costs, rose to USD328 from USD183 in June. It hit USD330 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.
“Assuming construction activity starts to improve in the first half of 2026 and policy measures come through (CBAM and scrap trade restrictions), this could mark the beginning of a more durable margin upcycle for European primary smelters and recyclers,” it added. Among other LME metals, copper rose 0.6percent to USD10,758 a ton in official activity, battling with resistance from the 21-day moving average at USD10,786.
The metal hit a record high of USD11,200 last week on worries about tighter global supply. Zinc gained 0.8percent to USD3,068, lead firmed by 0.3percent to USD2,026 and tin was up 0.8percent at USD35,950 while nickel added 0.5percent to USD15,115.
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