Aluminum nears 2-year high on China optimism

LONDON — Aluminum hit its highest level in nearly two years on Wednesday, supported by optimism that China would carry out plans to cut supply and by a rebound in the oil price.

Three-month aluminum on the London Metal Exchange (LME) climbed 0.80% to close at $1,960 a ton, its strongest since May 2015.

“As long as China follows through with this and takes its environmental concerns seriously, there is potential for aluminum to perform quite well,” Nitesh Shah, a commodities analyst at ETF Securities, said.

China said it would require aluminum smelters to cut capacity by 30% over the winter heating months as part of its antipollution measures.

Oil prices rose nearly 2% on Wednesday as US crude inventories rose less than expected, supply disruptions continued in Libya and the OPEC-led output cut by producing countries looked likely to be extended.

Japan’s aluminum premium for shipments during the April to June quarter has been set at $128 per ton, up about a third from the quarter before due to higher overseas prices, five sources directly involved in the pricing talks said on Wednesday.

Activity in China’s manufacturing sector likely grew for an eighth straight month in March as a surprise rebound in the property market added to a construction boom, boosting sales of building materials from steel to cement, a Reuters poll showed.

The dollar pulled away from four- and- a- half- month lows against a basket of currencies to a near one-week high.

China’s top copper smelters have agreed to an 11% cut in second- quarter treatment and refining fees, after disruptions at the world’s two biggest copper mines curbed the global supply of raw material.

Regulatory delays to a proposal to slash initial clearing margins by the LME have dealt another blow to the exchange’s ability to fend off competition from US rival CME Group, whose margins are sharply lower.

Cash LME nickel fell to a $67 discount against the three month nickel contract, the steepest discount since Jan. 2015, reflecting a market in ample supply.

Copper ended up 0.60% to $5,907 per ton; zinc was at a oneweek high, up 1.20% to $ 2,858, lead gained 0.90% to $ 2,350; while tin added 0.70% to $20,175. —