LONDON: Aluminium prices fell to five-week lows on Monday as surging inventories in London Metal Exchange-approved warehouses hit sentiment, while copper was boosted by Chinese data showing a jump in new bank loans.
Aluminium prices on the LME had fallen 0.9% to $2,418 a tonne by 1710 GMT after earlier dropping to $2,410, the lowest since Jan. 10.
Copper gained 0.9% to $8,934 a tonne.
“The headline rise in stocks triggered the selling in the aluminium market and some positive data from China is helping copper,” a metals trader said.
Traders said transactions ahead of settlement on Wednesday could create volatility across metals on the LME.
LME aluminium stocks at 576,775 tonnes have nearly doubled since Feb. 6, easing fears about shortages and supplies on the LME market.
Aluminium inventories in warehouses monitored by the Shanghai Futures Exchange at 268,984 tonnes are up about 180% since end-December, which analysts say is a reflection of weak demand in top consumer China.
However, a jump in new bank loans in China to a record 4.9 trillion yuan ($720.21 billion) last month, suggesting the country’s central bank is looking to kickstart growth after the lifting of COVID controls, is a plus, traders said.
“It’s a positive, but it will take time to feed through,” a trader at a commodity-focused fund said. “Meanwhile, the macro elements are still very much in play.
Macro elements are a reference to the US Federal Reserve and its decisions on interest rates, which help determine dollar direction. Clues to Fed policy will come from US consumer price data on Tuesday.
A higher U.S currency typically makes dollar-denominated metals more expensive for holders of other currencies, which could subdue demand for industrial metals.
Meanwhile, rising zinc stocks in LME warehouses have eased worries about availability on the exchange. This can be seen in the narrowing premium for the cash over the three-month contract.
Three-month zinc rose 2.1% to $3,106 a tonne.
In other metals, lead was up 1.6% at $2,112 a tonne, tin added 0.7% to $27,550 and nickel slipped 4.7% to $26,485.