Aluminium trends higher amid low inventories
ALUMINIUM PRIC ES GAINED AT THE CLOSE OF THE WEEK’S TRADING, UNDERPINNED by low inventories and China’s plans to raise the benchmark price for long-term coal contracts in 2022.
Three-month aluminium on the London Metal Exchange (LME) rose 1.2 per cent to $2,631 a tonne, while the most-traded January aluminium contract on the Shanghai Futures Exchange (ShFE) gained 0.5 per cent to 18,975 yuan ($2,979.46) a tonne.
Analysts noted that unforeseen supply hits have played a large impact in restricting growth despite a step-change higher in the aluminium price. A protracted strike at the Kitimat smelter in Canada, though resolved in October, is said to have dented North American production, which fell by 1.8 per cent over January-October.
Also, high gas and energy prices in Europe are allegedly constraining regional smelter production, which was running at an annualised 3.29 million tonnes in October, down from an excess of 3.40 million in both April and May. LME stocks have also fallen to 893,775 tonnes, their lowest level since 2007.
China, the world’s largest aluminium producer, is currently running short of primary metal production. Estimates by the International Aluminium Institute (IAI), showed that national output of aluminium of the Asian powerhouse peaked in February, when it was running at an annualised rate of 39.7 million tonnes before declining to 38.5 million tonnes in October.
As it stands, multiple Chinese smelters have been ordered to reduce or curtail production as provincial governments try to meet quarterly energy usage and efficiency targets. Elsewhere, copper prices eased; pressured by a firm dollar and a decline in demand due to concerns over the Omicron Covid-19 variant with countries imposing new restrictions to curtail its spread, a move analysts said could potentially derail the global economic recovery.
Benchmark copper on the LME shed 0.4 per cent at $9,4699.50 per tonne. Prices of other base metals were mixed as zinc rose 1.2 per cent to $3,184 per tonne, lead was down 0.9 per cent at $2,235 per tonne, tin declined 0.8 per cent at $39,275, while nickel gained 0.6 per cent to $20,065 per tonne.