Speculative buying fuels aluminum’s surge; weak greenback helps copper

LONDON — Aluminum surged to a two-and-a-half month high on Tuesday, pushed up by speculative buying, but some analysts doubted how long the rally could last given expectations of high Chinese exports.

Three- month aluminum on the London Metal Exchange (LME) ended up 2.1% at $1,874 a ton, its highest since early February. A trader said buying from speculators was triggered when prices broke through resistance at $1,845.

“We’ve seen some pretty strong CTA (commodity trading advisor) buying coming in to the market, but certainly the overall fundamental picture still remains relatively soft,” said Nicholas Snowdon, analyst at Standard Chartered.

“The risk of Chinese primary exports and signs of ongoing softness in the Western physical market are the two factors that suggest that the rally should be sold into.”

However, the deputy chief executive of United Company Rusal, the world’s top aluminum producer, said worries about Chinese aluminum flooding the global market were not justified.

The only other gainer of the day was copper, which closed 0.9% up at $6,118 a ton, helped by a weaker dollar, signs of tighter supply and expectations of further economic stimulus in China.

The metal has been consolidating since hitting near six-year lows in January, as unexpected supply disruptions spurred analysts to cut their 2015 surplus forecasts.

Worries about demand in China, which consumes nearly half the world’s copper, have kept its gains in check, though the concerns faded slightly following comments from Chinese officials about measures to bolster growth.

Daily LME data showed copper stocks fell to 338,250 tons. The increase in copper stocks seen in the first quarter this year has petered out in the second, indicating tighter supply.

Elsewhere, nickel fell 0.8% to $13,445 a ton, eroding its gains of around 6% over the two previous sessions.

LME data showed nickel stocks hit a new record of 442,950 tons.

Tin failed to trade in closing rings and was bid at $ 15,700, down 3.4% from Monday’s close.

Lead closed down 1.2% at $2,079 and zinc traded down 0.2% at $2,295 a ton.