Aluminum price rides on Rusal sanctions news

LONDON — Aluminum rebounded on Monday as investors bought back bearish positions after a US official raised the prospect of lifting sanctions on Russia’s Rusal.

Canceling sanctions on Rusal, the world’s biggest aluminum producer outside of China, would ease fears of a supply shortage. However, some investors who had placed short positions in expectation of sanctions being lifted were now liquidating them, said Julius Baer analyst Carsten Menke.

“For aluminum, it’s probably sell the rumor, buy the fact,” Mr. Menke said.

Some consumer buying was also seen, Marex Spectron’s Alastair Munro said in a note.

US Treasury Secretary Steven Mnuchin told Reuters the Treasury was open to removing Rusal from a US sanctions list, adding that the objective was “not to put Rusal out of business.”

Three-month aluminum was the biggest gainer on the London Metal Exchange ( LME), climbing two percent in closing openoutcry trading to $2,069 a ton.

Aluminum soared to a sevenyear peak of $2,718 in April after sanctions were slapped on Rusal, but prices tumbled after the US initially said there was potential for the sanctions to be lifted. Prices lost further ground over the past two months on worries of weaker demand because of trade tensions and a slowdown in top metals consumer China.

On-warrant LME aluminum inventories — those not earmarked for delivery — slid by 30,275 tons to 1,011,725 on Friday, data showed.

LME zinc slipped 0.80% to end at $2,555 a ton. LME data showed a large short in August futures, while a single holder controlled more than half of LME inventories. LME zinc inventories rose by 17,200 tons to 250,400 on Friday, LME data showed.

LME copper fell 0.30% to finish at$6,130 a ton. Last week prices fell for a sixth week in a row, hitting their lowest in a year at $5,988. Labor negotiations at Chile’s Escondida copper mine, the world’s largest, are deadlocked without signs of progress toward an agreement a little more than a week before the current contract expires. China’s June scrap copper imports dropped by 39.8% year on year to 200,000 tons, Chinese customs data showed.

Nickel closed down one percent at $13,400 a ton, lead dipped 0.10% to $2,134 and tin, untraded in closing rings, was bid down 0.10% at $19,450.