Aluminium slips from two-month high on US-China trade worries

LONDON: Aluminium looked set to snap a five-session winning streak on Thursday as trade tensions between the United States and top metals consumer China upstaged optimism over the chances of clinching a new North American Free Trade Agreement (NAFTA).

Benchmark aluminium on the London Metal Exchange (LME) slipped by 1.1 percent to $2,148 a tonne in official trading rings after jumping 1.8 percent in the previous session.  It hit a two-month high of $2,178 on Wednesday.

The leaders of the United States and Canada expressed optimism on Wednesday that they could reach a new NAFTA deal by a Friday deadline. The latest trade talks between China and the United States ended last week without a deal.

"Short-term market sentiment is really quite negative for metals, but the hit to demand from trade tensions might not justify the fall in prices that we have seen," said Capital Economics senior commodities economist Caroline Bain.

"The negative trends, i.e. softer Chinese growth and the escalation in trade tensions, should negatively affect aluminium as well and if (U.S. President Donald) Trump goes ahead with tariffs on auto imports it could be particularly negative for aluminium demand."

POLL: Activity in China's factory sector is likely to have slowed for a third straight month in August as domestic demand remained weak and exporters faced rising uncertainties from the trade war with the United States, a Reuters poll showed.

ALUMINIUM: Trump has signed proclamations permitting targeted relief from aluminium import quotas from Argentina, the U.S. Commerce Department said. In 2017 Argentina exported $763 million of aluminium, mostly to the NAFTA market.

INVENTORIES: Cancelled warrants, material earmarked for delivery, rose by 24,850 tonnes, reducing on-warrant stocks available to the market to 781,475 tonnes, which is the lowest since March 2007.

CHINA ALUMINA: China is shipping unusually high volumes of alumina for a second time this year to an international market desperate for the ingredient used to make aluminium, traders and analysts said, even as domestic prices rise and put pressure on smelters.

SHFE ALUMINIUM: The most-traded October aluminium contract on the Shanghai Futures Exchange hit a two-month high of 15,100 yuan in the previous session.

JAPAN METALS EXPORTS: Japan's July exports of copper rose 10.4 percent year on year to 49.9 million tonnes while zinc exports slipped by 7.6 percent to 5.2 million tonnes.

OTHER METALS: LME copper dipped by 0.3 percent to $6,071 a tonne, zinc was bid down 1.2 percent to $2,483, lead was bid 0.4 percent lower to $2,082, tin was down slightly at $18,920 and nickel lost 0.7 percent to $13,400.