Aluminium gains on supply uncertainty, broad risk-on mood
- Benchmark three-month aluminium on the London Metal Exchange was up 0.34% at $3,097.5 a metric ton
Aluminium prices rebounded from an 8-month low, driven by supply uncertainties and a broader risk-on market sentiment, while other base metals showed mixed performance.
- Aluminium's rebound from an 8-month low.
- Supply uncertainties and falling warehouse stocks.
- Broader market risk-on sentiment and AI's influence.
SINGAPORE: Aluminium rose on Wednesday, supported by a broader market risk-on atmosphere and as attention turned to supply uncertainty amid falling warehouse stocks.
Benchmark three-month aluminium on the London Metal Exchange was up 0.34% at $3,097.5 a metric ton by 0300 GMT.
The most-traded aluminium contract on the Shanghai Futures Exchange edged 0.11% higher to 23,765 yuan ($3,565.11) a ton.
“Healthy trading volumes alongside firm prices point to underlying buying conviction, with supply-side uncertainties and limited prompt availability providing a supportive floor,” Rupankar RM, head of market research and data intelligence at AL Circle, said.
There were orders on Tuesday to withdraw 3,500 tons of aluminium from LME-registered warehouses in Asia. LME stocks are overwhelmingly of Russian origin, which many traders have shunned.
And aluminium volumes in SHFE-monitored warehouses fell by more than 10% last week, to 212,858 tons.
A Singapore-based aluminium trader pointed to a broader risk-on attitude, with prices tracking stock market performance. Shares have been buoyed by revived confidence in AI.
South Korean shares rallied 6% on Wednesday, as chipmakers jumped when SK Hynix announced higher-than-expected third-quarter profits.
An AI-fueled tech rally sent US stocks to a higher close on Tuesday.
Copper was more mixed ahead of the closely watched US Federal Reserve meeting later on Wednesday.
On the LME, the benchmark edged down 0.23%, while on the SHFE, the price gained 0.41%.
Interest rate traders are largely pricing in no rate hike at this meeting, according to the CME’s FedWatch tool, but expect an 84% chance of a hike at the December meeting.
Higher interest rates can weigh on growth dependent commodities like copper by dampening economic activity.
Among LME metals, zinc added 0.18%, lead lost 0.44%, nickel dipped 0.12% and tin lost 0.5%.
Meanwhile on the SHFE, zinc added 0.29%, lead fell 0.43%, nickel lost 0.36% and tin gained 0.24%.