Aluminum steady as investors reassess Chinese capacity cuts

LONDON — Aluminum steadied on Friday after its biggest one day increase in nearly three months a day earlier as investors reassessed concerns about capacity cuts in top producer China.

An industry association said last month that China would launch a crackdown to curb the illegal expansion of aluminum capacity and Chinese media on Thursday reported significant shutdowns were in the pipeline.

But offsetting these closures, later reports indicated new capacity was coming on stream.

“The China story is priced in. They’re ( also) bringing new capacity online which is more efficient. We don’t expect to see the aluminum market rally significantly from these levels. We have it averaging $1,950 in the fourth quarter,” said Warren Patterson, Commodities Strategist at ING.

Three-month London Metal Exchange (LME) aluminum ended up 0.20% at $1,927 a ton, having gained 1.70% in the previous session.

“While production may be reduced in China, it is being expanded elsewhere. In the US for example, a smelter with a capacity of a good 160,000 tons per annum looks set to go back into operation next year,” Commerzbank said in a note.

Zinc fell 0.60% to $2,786 a ton as warehouse inventories monitored by the Shanghai Futures Exchange jumped 16.20% from last Friday to 77,786 tons.

Also, LME data showed a 28,500 ton, or 41%, daily increase in “on-warrant” or available inventory.

Nickel ended 4% higher at $9,580 a ton, its strongest daily percentage gain since November.

Philippine President Rodrigo R. Duterte promised on Wednesday to resolve an impasse caused by a ministerial order to close more than 20 mines in the world’s top source of nickel ore, but told miners to end practices that damaged the environment.

LME copper ended up 0.90% at $5,926 a ton, helped by encouraging economic reports from top consumer China and as weak US consumer prices and retail sales data dimmed chances of another rate rise this year.

Chile’s Antofagasta has reached a new wage agreement with supervisors at its Centinela copper mine, defusing the risk of a strike amid a volatile labor environment in the South American country.

Lead closed up 1% at $ 2,316 while tin closed flat at $19,810. —