China ramp-up pushes aluminium prices to 14-month lows
ALUMINIUM prices tumbled to their lowest in more than a year on Tuesday (Jul 12) on expectations of rising supply from top producer China where smelters have been ramping up output.
Benchmark aluminium on the London Metal Exchange (LME) traded down 0.4 per cent at US$2,370 a tonne in official rings.
Prices of earlier hit US$2,352, the lowest since May 2021.
“China aluminium production data should be out soon, the market is expecting a rise,” a metals trader said. “Higher US interest rates and dollar are a negative for metals demand.”
Primary aluminium production in China has been rising alongside easing curbs on power consumption.
It hit a record 3.42 million tonnes in May, up 3.1 per cent from the same month a year earlier and compares with 3.36 million tonnes in April.
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This combined with weaker aluminium demand, partly due to coronavirus lockdowns in top consumer China, has led some analysts to pare back their forecasts for large surpluses this year.
However, supporting aluminium on the LME market are stocks in LME registered warehouses at 340,375 tonnes , the lowest since 2002.
Cancelled warrants, or metal earmarked for delivery, stood at 54 per cent of the total which indicates more aluminium is due to leave the LME system.
Concern about the availability of zinc on the LME market because of low stocks has again pushed up the premium for the cash over the three-month contract to around US$90 per tonne from levels near US$20 at end-June.
Three-month zinc was up 0.7 per cent at US$3,022 a tonne.
Overall, worries about an economic and manufacturing slowdown as central banks raise interest rates to rein in soaring inflation have hit demand for industrial metals.
The US. Federal Reserve is expected to hike rates another 75 basis points later this month. Higher US rates have pushed the dollar to near 20-year highs against a basket of currencies .
A rising US currency makes dollar-denominated commodities more expensive for consumers operating outside the United States, which could undermine demand.
Elsewhere, copper was down 2.4 per cent at US$7,400 a tonne, lead slipped 0.9 per cent to US$1,925, tin fell 2.9 per cent to US$25,500 and nickel lost 1.4% to US$21,530. REUTERS
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