Aluminium touches seven-week high on waning stocks

SINGAPORE: Aluminium prices rose for a seventh session to touch their highest level in seven weeks on Tuesday, as fears of tight inventory and a continued supply deficit boosted the light metal.

Benchmark three-month aluminium on the London Metal Exchange was up 0.54% at $3,335.5 a metric ton by 0300 GMT.

Earlier in the session, the price touched $3,350 a ton, the metal’s highest level since June 23.

The most-traded aluminium contract on the Shanghai Futures Exchange rose 0.62% to 24,185 yuan ($3,586.20) a ton.

Aluminium stocks have fallen sharply, and analysts expect the market to remain in deficit this year.

The US-Iran war has disrupted aluminium shipments from the Middle East, which accounts for almost 9% of global capacity.

Hopes of a deal between the two countries faded on Tuesday after US President Donald Trump demanded Iranian reparations.

Elsewhere, copper received support from supply concerns too and cooling fears of higher-for-longer US interest rates. Copper prices on the LME were up 0.14%, while the price on the SHFE gained 0.58%.

The cash-to-three-month spread on the LME was in sharp backwardation at $145.5 a ton, signalling tight physical availability.

LME stocks of the red metal have fallen sharply as material is pulled into the US from warehouses elsewhere, as traders consider a potential US tariff on imports of refined copper.

Last week’s weaker-than-expected US jobs data saw expectations of an interest rate hike fall, ANZ senior commodity strategist Daniel Hynes said in a note.

“Higher rates tend to hit industrial metals by weighing on economic growth.”

Among LME metals, zinc dipped 0.12%, lead was steady, nickel dipped 0.24% and tin slipped 0.06%.

Among SHFE metals, zinc added 0.22%, lead gained 0.76%, nickel lost 0.67% and tin lost 0.45%.