LONDON: Aluminium prices hit their five-week high on Tuesday on increased fund buying and a shortage of raw material in top producer China.
Three-month aluminium on the London Metal Exchange earlier touched $2,482 per metric ton, the highest since July 15. It last traded up 1.4% at $2,479, as of 1113 GMT.
The momentum continued after a strong rally of 3.4% in the previous session breaking the 50-day moving average.
“Aluminium was too cheap one month ago. Funds are picking up, now the rally is restoring its fair value,” Daniel Smith with Amalgamated Metal Trading Ltd said.
Negative sentiment is fading from investors, with some commodity trading advisor (CTA) funds starting to build a net-long position in the light metal, he added.
London copper retreats on short-covering, China demand worries
Also supporting aluminium prices are China’s surprising growth in import despite robust domestic production, Smith said.
China bought 129,898 tonnes of primary aluminium in July, up 11.5% year on year, customs data showed on Tuesday.
Meanwhile, the raw material for making aluminium became costlier. China’s alumina futures hit a near three-month high due to rising consumption. Cuts in alumina refineries of Alcoa and Rio Tinto in Australia also strained supply.
Over 30% of alumina inventories were withdrawn from warehouses monitored by Shanghai Futures Exchange (ShFE) in the past three weeks, as profit related to making primary aluminium improved.
LME copper rose 0.2% to $9,273 a ton, with upside capped by high inventory. Warehouse stockpiles rose to a five-year high of 320,050 tons, with LME data on Aug. 19 showing a major increase in stock in Taiwan.
The pace of Chinese copper exports slowed in July, customs data showed on Tuesday. The top copper consumer sold 70,006 tons of copper overseas last month, half of what it exported in June.
Among other metals, LME nickel rose 1% to $16,835, zinc edged up 1.2% to $2,821.5, tin was up 0.5% at $32,730 and lead advanced 1.2% to $2,062.5.
Source: Brecorder
