LONDON: Aluminium prices climbed on Friday as an explosion at a smelter in China fuelled fears about tighter supplies, while concerns about shortages and low inventories boosted copper prices.
Benchmark aluminium on the London Metal Exchange was up 1.6% at $2,657 a tonne at 1040 GMT, having earlier touched a session high of $2,697.5. Copper climbed 1.7% to $9,601 a tonne.
"News of the explosion helped aluminium in a knee-jerk reaction," an aluminium trader said, adding that higher aluminium prices would depend on whether the disruption is prolonged and exacerbates shortages.
"For copper the story is still about inventories."
Yunnan: An aluminium plant in China's Yunnan province with annual capacity of 300,000 tonnes stopped production after an explosion on Thursday evening, Shanghai Metals Market reported.
A person answering the phone at Yunnan's Wenshan city emergency management bureau confirmed to Reuters that an explosion took place at an aluminium factory on Thursday night, without naming the company nor providing any other details.
Power curbs in China have slashed around 7% of domestic aluminium annual capacity so far this year, according to estimates from consultancy Wood Mackenzie.
Copper prices fall as rising LME stockpiles ease supply fears
Inventories: Aluminium stocks in LME-registered warehouses at 948,650 tonnes, about half the levels seen in March, and cancelled warrants - metal earmarked for delivery - at 39% have sparked concern about supplies on the LME market.
This has created a premium for the cash over the three-month aluminium contract in recent days.
Copper: Stocks at 89,875 tonnes compare with levels above 250,000 tonnes in August and cancelled warrants at 30% suggest another 27,300 tonnes are due to leave LME warehouses.
The premium for the cash over the three-month copper contract has risen over the past few days, after dropping to around $15 a tonne earlier this week from levels above $1,100 a tonne in October.
Other Metals: Zinc rose 0.7% to $3,181 a tonne, lead added 0.6% to $2,228 and nickel climbed 1% to $19,840, while tin slipped 0.9% to $38,110 as shortage-related concerns started to recede.