Aluminium prices hit more than 10-year high as supply fears grow

ALUMINIUM prices hit their highest in more than 10 years on Thursday as concerns over supply of the energy-intensive metal were stoked further by coal shortages at several power plants in India.

The coal shortages in India, the second-biggest producer of primary aluminium behind China, have raised concerns about potentially serious disruption to domestic aluminium output.

Benchmark three-month aluminium on the London Metal Exchange (LME) was up 1.4 per cent at US$2,727.50 a tonne at 0700 GMT, having touched its highest since May 2011 at US$2,734.50.

The most-traded October aluminium contract on the Shanghai Futures Exchange ended daytime trading 1.4 per cent up at 21,460 yuan (S$4,465) a tonne.

It scaled a 13-year peak of 21,550 yuan on Monday as production curbs in key Chinese smelting regions sparked supply fears.

India has urged utilities to import coal to boost domestic supply of the fuel after coal-fired power generation surged with the easing of measures to contain the Covid-19 pandemic.

"Aluminium supply faces growing risks due to tightness in Indian coal supply," ING commodity strategists said in a note.

The country's aluminium smelters had asked state-run Coal India, the world's largest coal miner, to restore supply, they said, citing media reports.

"So far there hasn't been a meaningful impact on India's aluminium supply, but the situation is worth monitoring," ING analysts said.

• Three-month LME copper rose 0.4 per cent to US$9,370 a tonne, as the dollar loitered around multi-week lows, making greenback-priced metals cheaper for holders of other currencies.
• Shanghai's most active October copper contract fell 0.8 per cent to 69,020 yuan a tonne.
• China's State Reserve Bureau released its third batch of aluminium ingots into the market on Thursday, with the 70,000 tonnes volume slightly lower than the second batch, according to Chinese metals information provider SMM.
• LME nickel firmed by 0.4 per cent to US$19,400 a tonne while Shanghai nickel dropped one per cent to 146,890 yuan. REUTERS