LONDON: Aluminium prices hit six-week highs on Thursday after a strike at Alcoa’s alumina refineries in Australia and warnings of shutdowns by Rusal revived concern about supply shortages.
Benchmark aluminium on the London Metal Exchange (LME) ended down 1.3 percent at $2,078 a tonne on profit-taking after the New York open. Earlier it touched $2,147.50, its highest since June 29.
It hit a 15-week low of $2,000.85 in late July on expectations that the United States would allow aluminium made by Rusal, the biggest producer outside China, to keep trading on global markets and trade disputes would weaken metals demand.
But with the more than 60-million tonne a year aluminium market expecting a deficit this year, investors are still wary of output disruptions, said Societe Generale analyst Robin Bhar.
“The fundamentals for aluminium are pretty tight,” he said, predicting a global aluminium shortfall of half a million tonnes this year.
ALUMINIUM STOCKS: On-warrant stocks of aluminium available to the market in LME-registered warehouses have fallen to 832,775 tonnes, the lowest since 2007, supporting prices.
SPREAD: However, the discount for cash aluminium over the three-month contract this week grew to its biggest since September last year, signalling that metal is available.
TECHNICALS: Aluminium had hit its 50-day moving average at $2,136 and was near its 200-day moving average at $2,167. Convincing moves above these levels could trigger further buying.
ALCOA STRIKE: A union said on Wednesday Alcoa workers had walked out at plants in Western Australia with capacity equal to around 8 percent of the global supply of alumina, used to smelt aluminium. Alcoa said it did not expect any immediate impact on production.
RUSAL: Sources close to Russia’s Rusal said the company was concerned about impending catastrophe if US sanctions on it are not lifted, with some of its production halted as early as September.
CHINA/TRADE WAR: China’s stock markets and yuan gained on Thursday, helping to lift industrial metals, even after China the day before said it was slapping additional tariffs of 25 percent on $16 billion worth of US imports, the latest step in a worsening trade dispute. China is the world’s biggest metals consumer.
CHINA FACTORIES: China’s factory price inflation cooled in July amid a slowdown in economic growth. Economists expect punitive tariffs on U.S goods to push price growth higher in months ahead.
Source: Brecorder
