Markets

Aluminium slides on doubts over China supply cuts

Published November 21, 2017 Updated November 21, 2017 10:09pm

Benchmark aluminium on the London Metal Exchange was untraded in official rings, but bid down 0.4 percent at $2,078 a tonne. Last week the price fell to $2,068.50, its lowest since Aug. 25.

"Output cuts in China are significant but there is talk that some of the major producers have already done enough," said Oxford Economics commodities analyst Dan Smith.

"Recent economic data from China shows a slowing, we should worry about demand."

CHINA OUTPUT: Binzhou, home to top global aluminium maker China Hongqiao Group, last month ordered 2.57 million tonnes of annual smelting capacity to be closed during the coming winter, though part of that may already have been closed as part of a clampdown on illegal smelting.

IAI: China's aluminium production in October was 2.546 million tonnes, down from 2.606 million tonnes in September, data from the International Aluminium Institute (IAI) showed on Monday.

CHINA DEMAND: China accounts for more than half of global aluminium output estimated at about 60 million tonnes this year and more than half of global demand.

CHINA ECONOMY: China's economy cooled in October, with industrial output, fixed-asset investment and retail sales missing expectations as the government extended a crackdown on debt risks and factory pollution.

STOCKS: Analysts say a sign of weaker Chinese demand can be seen in aluminium stocks monitored by the Shanghai Futures Exchange, which last week rose by more than 24,000 tonnes to above 691,000 tonnes. Last December stocks were about 72,000 tonnes.

ALUMINIUM TECHNICALS: Support comes in around the 100-day moving average at $2,070 and strong resistance at $2,135, where the 21-day and 55-day moving averages are converging.

COPPER: Prices rose 0.5 percent to $6,860 after touching a one-week high at $6,874.50. Falling stocks in LME-registered warehouses -- down more than 25 percent since mid-September to 234,375 tonnes -- are a positive, traders said.

COPPER STOCKS: Cancelled warrants at more than 40 percent of total stocks are also contributing to concern about a tight LME market.

COPPER TECHNICALS: Upside resistance kicks in at the 21-day moving average around $6,890 and support is at $6,755, the 55-day moving average.

OTHER METALS: Zinc rose 0.3 percent to $3,172 a tonne, lead was up 0.3 percent at $2,468, tin slipped 0.3 percent to $19,400 and nickel added 0.2 percent to $11,675.

Copyright Reuters, 2017