Aluminum nears 6-week high on seasonal demand

LONDON — Aluminum prices climbed on Tuesday to near sixweek highs as the market factored in seasonally stronger demand, but ample supplies from top producer China are likely to cap gains.

A firmer US currency after inflation data above consensus also added pressure to industrial metals. This makes dollar-priced commodities more expensive for holders of other currencies, limiting demand.

Three-month aluminum on the London Metal Exchange (LME) touched $2,270 per metric ton, the highest since Feb. 1. It last traded 0.1% up at $2,260.50 as at 1710 GMT.

“There are demand concerns on growing inventory in China but it could be more a seasonal pattern to prepare for consumption in second quarter this year,” said Tom Price, head of commodities strategy at Liberum.

Aluminum inventory has grown 85% so far this year to 184,358 metric tons in warehouses monitored by the Shanghai Futures Exchange.

Stocks in the LME’s registered warehouses have grown by 2% to 577,675 tons in the same period.

China produced a record amount of aluminum in 2023, which is likely to limit upside for prices of the light metal mainly used for making auto parts and power cables.

The property crisis in China has curbed demand for industrial metals. In the latest sign the crisis is not over, Moody’s downgraded China’s No. 2 property developer Vanke to a “junk” rating.

“Base metals demand derived from China’s distressed property sector is more likely to decline gradually for two to three years from the peak, instead of a total collapse,” Mr. Price said.

Also on the week’s agenda is China’s bank lending data, which is expected to have fallen sharply in February from January’s record high due to seasonal factors. The loan data includes total social financing numbers, a gauge of future metals consumption.

LME copper was flat at $8,655 a ton and tin lost 0.8% to $27,425. Zinc edged down 0.5% to $2,555, while lead rose 0.7% to $2,141.50. Nickel was up 0.6% at $18,495. —