Aluminium touches three-week high, supply back in focus
SINGAPORE: Aluminium prices rose on Thursday, buoyed by continued supply tightness and a slight improvement in economic risk sentiment, which also boosted other industrial metals. Benchmark three-month aluminium on the London Metal Exchange was up 0.3% at $3,293.5 a metric ton by 0300 GMT. Earlier, it touched $3,306.50, its highest since August 13. The most-traded aluminium contract on the…
Aluminium prices surged to a three-week high on Thursday, driven by ongoing supply constraints and a modest uplift in economic risk sentiment, which also benefitted other industrial metals. The benchmark three-month aluminium on the London Metal Exchange climbed 0.3% to $3,293.5 per metric ton by 0300 GMT, peaking at $3,306.50 on August 13. The most actively traded aluminium contract on the Shanghai Futures Exchange gained 1.08% to 24,320 yuan per ton.
Rupankar RM, head of market research and data intelligence at AL Circle, explained that aluminium is being supported by a mix of physical sales, anticipating a seasonal uptick in Chinese demand, and limited supply expansion. Although there is optimism about increased supply from major producers in the Middle East, experts anticipate the market will persist in deficit this year, with LME stocks of the metal, extensively utilized in manufacturing, consumer goods, and automobiles, near a 36-year low.
Copper and zinc, which experienced losses on Wednesday due to cooling supply concerns and a macroeconomic risk-off sentiment, showed uneven gains on Thursday. LME copper rose 0.14%, while it increased 0.34% on the Shanghai Futures Exchange. LME zinc added 0.36%, whereas the SHFE zinc price dipped slightly by 0.04%.
The key LME cash-to-three-month copper spread remained in backwardation on Wednesday, indicating limited availability, which tightened to $87.56 per ton, the narrowest since August 21. The US dollar index slipped 0.13% on Thursday, offering assistance to the broader base metals sector. A weaker dollar makes greenback-priced commodities more affordable for buyers using alternative currencies.
Meanwhile, bond and stock markets surged, and prospects of a September US interest rate hike softened to 62% from 67% on Monday, according to the CME’s Fedwatch tool. Higher interest rates may dampen demand for growth-dependent commodities by exerting downward pressure on economic activity.
Among LME metals, lead maintained stability, nickel remained unchanged at only 0.04%, and tin surged 0.69%. On the Shanghai Futures Exchange, lead dropped 0.37%, nickel rose 1.65%, and tin climbed 0.26%.
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