Shanghai aluminium prices fell on Friday to their lowest in over a month as tumbling Chinese coal prices eased concerns of disruptions to metal supplies and forced selling in some commodities.
The most-traded November aluminium contract on the Shanghai Futures Exchange shed as much as 7.6% to 21,500 yuan ($3,361.27) a tonne, its lowest since Sept. 6.
Three-month aluminium on the London Metal Exchange fell 1.1% to $2,879 a tonne by 0544 GMT, after dropping as much as 5.5% in the previous session.
China's thermal coal futures sank about 13%, extending losses since Tuesday when they toppled off record highs, as Beijing signalled it would intervene to cool surging prices to help electricity producers out of a widespread power crunch.
LME aluminium may temporarily peak in $3,262-$3,310 range
Aluminium has been touted as the base metal most impacted by a widespread power curb in China, the world's biggest producer of the metal, due to its energy intensive smelting process.
Meanwhile, rising aluminium inventories in China also pressured prices, with ShFE stocks up for four straight weeks and social stocks in China
"Collapsing coal prices in China sent shockwaves across metal markets, leading to some speculative liquidation," said ING analysts in a note.
"While speculative activity fuelled by the power crunch may cool down for a bit now, there are little signs of easing restrictions for Chinese metals output," it added.