Shanghai aluminium scales over 3-month peak on dwindling inventories

• Aluminium stocks in warehouses tracked by ShFE dropped to 218,367 tonnes, their lowest since March 2017.
• China and the United States are in close communication over the signing of their Phase 1 trade deal.

SINGAPORE: Shanghai aluminium prices rose to their highest in more than three months on Thursday, underpinned by depleting stocks of the metal in exchange-tracked warehouses in China.

The most traded aluminium contract on the Shanghai Futures Exchange (ShFE) climbed 1pc to 14,200 yuan ($2,017.36) a tonne, its highest close since Sept. 12 and the third straight session of gains.

Aluminium stocks in warehouses tracked by ShFE dropped to 218,367 tonnes, their lowest since March 2017, exchange data showed.

"The ShFE market has rallied this week, on the back of declining exchange stocks. Looking ahead, heavy snow in northern areas (in China) has led to some logistical issues, which could see a further fall in ShFE stock levels," ING said in a note.

A Singapore-based trader said demand for aluminium has been improving, lending support to prices of the metal used in construction, packaging and transportation. China is the biggest user and producer of aluminium.

Benchmark three-month aluminium on the London Metal Exchange (LME) was up 0.1pc at $1,779.50 a tonne by 0750 GMT, held back by higher inventories in LME-approved warehouses, where stocks were at their highest since May 2017.

FUNDAMENTALS

ALUMINIUM STOCKS: Despite rising aluminium inventories in LME warehouses, data showed that one party had control of 80pc-90pc of available stocks and short-term futures.

TRADE DEAL: China and the United States are in close communication over the signing of their Phase 1 trade deal, China's commerce ministry said.

TARIFFS: China on Thursday unveiled a new list of tariff exemptions for imports from the United States, most of them chemical products, and said it will continue to work on the product exemptions and release the second batch of waiver list.

OTHER PRICES: LME copper fell 0.1pc to $6,170.50 a tonne, nickel advanced 1.2pc to $14,035 a tonne, zinc rallied 0.8pc to $2,319.50 a tonne and lead gained 0.7pc to $1,938.50 a tonne.

SHANGHAI PRICES: ShFE copper was almost unchanged at 49,110 yuan a tonne, nickel rose 0.7pc to 110,880 yuan a tonne, zinc edged up 0.4pc to 18,070 yuan a tonne while lead climbed 1.3pc to 15,070 yuan a tonne.

ANTOFAGASTA: Chile's Antofagasta said on Wednesday it had kicked off the environmental permitting process for its $1.7 billion Twin Metals copper, nickel and platinum mining project in the United States.