Sup­ply con­cerns, weaker dol­lar push alu­minum to high­est since 2011

Business World - - WORLD MARKETS -

LON­DON — Alu­minum prices ral­lied to their high­est since 2011 on Mon­day as the dol­lar fell and Rio Tinto de­clared force ma­jeure on some cus­tomer con­tracts af­ter the US im­posed sanc­tions on its Rus­sian part­ner Rusal.

Bench­mark alu­minum on the Lon­don Metal Ex­change (LME) closed 5% higher at $2,399 per ton af­ter ear­lier touch­ing its high­est since Septem­ber 2011 at $2,403.

The metal, with uses as di­verse as in beer kegs and aero­plane parts, also recorded its big­gest one- day jump since Novem­ber 2011.

“The main thing that has been a cat­a­lyst be­hind alu­minum has been the is­sues around the sanc­tions against Rusal which will make the mar­ket tighter,” said ETF Se­cu­ri­ties an­a­lyst Nitesh Shah. “In ad­di­tion to that is the weaker dol­lar and the gen­eral up­side for in­dus­trial met­als in re­cent days that is work­ing in alu­minum’s fa­vor.”

Apart from say­ing it would de­clare force ma­jeure on cer­tain cus­tomer con­tracts, Rio Tinto also said on Fri­day it was re­view­ing Rusal’s 20% stake in the Queens­land Alu­mina re­fin­ery, Rusal’s sup­ply and off­take ar­range­ments, baux­ite sales to Rusal’s re­fin­ery in Ire­land and off­take con­tracts for alu­mina.

The global alu­minum mar­ket could face sup­ply short­ages be­cause of US sanc­tions on Rus­sia and Norsk Hy­dro’s pro­duc­tion cuts in Brazil, Hy­dro’s chief ex­ec­u­tive told Reuters on Mon­day.

Swiss trader Glen­core will de­clare force ma­jeure on some alu­minium sup­ply, a source told Reuters on Wed­nes­day last week, while Com­merzbank’s head of com­modi­ties re­search Eu­gen Wein­berg said other traders were likely to de­clare force ma­jeure fol­low­ing the Rusal sanc­tions.

To­tal stocks of alu­minum rose 15,100 tons to 1.4 mil­lion tons. To­tal stocks are up 9% since the start of the Rusal sanc­tions on April 6.

The LME will sus­pend Rusal’s alu­minum from its list of ap­proved brands from April 17 af­ter some mem­bers raised con­cerns about set­tling LME con­tracts with com­pa­nies fac­ing sanc­tions.

The premium of cash to the three- month con­tract on the LME was at $52 a ton on Thurs­day, its high­est in at least a decade, but nearly evap­o­rated by Mon­day to above $6.

The US alu­minum premium on Comex was at 21.1 cents per pound ($ 465 a ton) on Fri­day, close to its high­est in three years.

Three- month cop­per ended 1.2% higher at $ 6,910.50 a ton; tin was flat at $ 21,025, zinc gained 0.60% to $3,136.50, lead added 3% to $ 2,370 and nickel rose 2.8% to a two-month high of $14,335 tons. —

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