Shanghai aluminum price hits 13-year high on supply worries in China
Shanghai aluminum prices climbed on Monday to their highest in more than 13 years on supply worries in China and upbeat sentiment after US Federal Reserve Chairman Jerome Powell struck a more dovish tone in a long-awaited speech.
The most-traded October aluminum contract on the Shanghai Futures Exchange rose as much as 4.2% to 21,550 yuan ($3,332.41) a tonne, its highest since August 1, 2008, before easing slightly to close at 21,495 yuan a tonne, still up 3.9%.
The metal has surged more than 30% this year, second only to tin among the six base metals traded on the London Metal Exchange, propelled by the global economic recovery.
A prefecture in China’s Xinjiang region has imposed output limits on five aluminum smelters starting from August as part of efforts to stamp out illegal production. The move followed several aluminum output disruptions due to power curbs in China earlier this year.
“The output of electrolytic aluminum in August may decline due to the dual control of domestic electricity curtailment and energy consumption,” Huatai Futures said in a report.
A major fire at a Jamaican alumina refinery earlier this month also helped to push the premium buyers pay for aluminum shipped to the US Midwest to new highs.
Powell’s wait-and-see approach in his address on Friday gave investors and market participants some reassurance that the central bank’s extraordinary efforts to prop up the economy were likely to support riskier assets a while longer.
“We will be carefully assessing incoming data and the evolving risks. Even after our asset purchases end, our elevated holdings of longer-term securities will continue to support accommodative financial conditions,” said Powell.
Last week, China said it would release its third batch of metals from state reserves on September 1 as part of its ongoing campaign to control prices and prevent commodities inflation from hurting growth.
The National Food and Strategic Reserves Administration said on Friday it will sell 70,000 tonnes of aluminum, 50,000 tonnes of zinc, and 30,000 tonnes of copper, quantities in line with the two earlier auctions that took place in July.
(With files from Bloomberg and Reuters)
Source: Mining.com
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