Shanghai aluminium falls for fourth day as demand concerns weigh

08 Apr, 2022

Aluminium prices in China fell for a fourth straight session on Friday to their lowest in more than three weeks, on worries that fresh lockdowns in China and higher interest rate environment could dent growth and demand in the metals market.

The most-traded May aluminium contract on the Shanghai Futures Exchange was down 1.3% at 21,835 yuan ($3,431.34) a tonne by noon break, after touching the lowest since March 16 in the early Asian trading. For the week, the contract is down 4.2%.

ShFE copper edged 0.1% higher, nickel rose 0.9%, zinc fell 1.1% and tin declined 1.7%.

"The worsening COVID-19 outbreak in China weighed on sentiment in the base metals sector," commodity strategists at ANZ said in a note.

"Nevertheless, the market maintains a bullish view on demand recovery post-COVID-19. Strong demand elsewhere coupled with ongoing supply disruptions have pushed inventories in some market to record low."

The major Chinese financial centre of Shanghai is currently under a city-wide lockdown as authorities work to contain the city's biggest ever COVID-19 outbreak.

Also weighing on metals, the dollar extended a squeeze higher on Friday, reaching a near two-year peak, supported by the prospect of a more aggressive pace of interest rates hikes by the US Federal Reserve.

A stronger dollar makes greenback-denominated metals more expensive for buyers using other currencies.

Aluminium hits 3-week low on China's COVID curbs, hawkish Fed

The premium for aluminium shipments to Japanese buyers for April to June was set at $172 a tonne, down 2.8% from the previous quarter, as weak demand in Japan and China outweighed concerns of supply disruptions from Russia, five sources said.

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