LONDON: Aluminium prices fell on Friday, with the market expecting an improvement in supplies from the key Middle East region as a US-Iran interim peace agreement appeared to hold.
Benchmark three-month aluminium on the London Metal Exchange was down 0.2percent at USD3,086 a metric ton in official open-outcry trading. “Weaker demand, easing geopolitical risks and growing expectations of future supply have driven a sharp correction in prices over the past month,” analysts at Citi said in a note. Citi now expects aluminium to recover towards USD3,300 a ton in September–December before bottoming out within a month.
The metal touched USD3,040, its lowest since February 19, on Thursday but managed to stay above a key psychological level of USD3,000 as a weaker dollar and easing concerns over an imminent US interest rate hike following softer-than-expected US jobs data provided support. Easing concerns about future output in the Middle East, which produces 9 percent of global supply, Emirates Global Aluminium said on Thursday it was restoring production sooner than expected at one of its complexes, damaged by Iranian missile strikes in March.
Meanwhile, Japanese aluminium buyers agreed to pay global producers premiums of USD395 per ton over the benchmark for July-September shipments, up 12-13percent from the previous quarter, two sources told Reuters.
Higher premium in Japan indicates that some tightness in the global physical market persists, although analysts expect it to loosen in July-August before restocking resumes in September.
In other LME metals, copper rose 0.1percent to USD13,342 a ton in official activity, supported by a weaker dollar and continuing outflows from stocks of the LME and the Shanghai Futures Exchange. China’s Yangshan copper premium, which reflects buying appetite in the world’s largest consumer, finished the week at USD74 a ton, the highest since mid-April.
LME tin jumped 2.1percent to USD52,005. Inventories of the metal in warehouses monitored by SHFE fell 18percent this week to an eight-month low of 6,222 tons. Zinc added 1.3percent to USD3,531, lead climbed 0.7percent to USD1,889, and nickel gained 0.4percent to USD16,320.
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