Industrial metals gain as aluminium hits 18-month high
- A weaker dollar, meanwhile, also buoyed metals because that makes them cheaper for non-US buyers.
- Prices could retreat as new coronavirus resrictions slow economic growth in Europe and elsewhere.
LONDON: Industrial metals rose alongside equities and oil prices on Tuesday as investors bet on Joe Biden to win the US presidency, potentially making increased economic stimulus more likely, while strong manufacturing data and signs of tighter supply pushed aluminium to an 18-month high.
A weaker dollar, meanwhile, also buoyed metals because that makes them cheaper for non-US buyers.
Benchmark three-month aluminium on the London Metal Exchange (LME) was up 1.3% at $1,891 a tonne in official trading after hitting its highest since May 2019 at $1,894.
Prices could retreat as new coronavirus resrictions slow economic growth in Europe and elsewhere, said Nitesh Shah, an analyst at investment manager WisdomTree.
However, he added that anti-pollution policies would, over time, boost demand for aluminium - a lightweight metal used in transport and packaging - and curb growth in production capacity, boosting prices.
MANUFACTURING: Robust factory data from top metals consumer China, the United States and the euro zone on Monday eased concerns about global growth as coronavirus cases rise.
DOLLAR: Investors and analysts expect the dollar to weaken over the long term whoever is US president.
ALUMINIUM SPREAD: Cash aluminium on the LME flipped to a premium against the three-month contract for the first time since December 2019, suggesting tighter nearby supply.
LOCKED UP: Large amounts of aluminium are locked up in financing deals, boosting prices of metal for spot delivery or on physical markets.
COLUMN: The era of constant expansion of China's aluminium production capacity could be ending, writes Andy Home.
COPPER: LME copper was up 0.6% at $6,801 a tonne and pushing towards last month's peak of $7,034, its highest in more than two years.
CHILE OUTPUT: BHP's Escondida, the world's largest copper mine, registered a drop in production in September, but leading mining company Codelco increased output, government data shows.
PREMIUMS: Chinese state-run copper buyers have not accepted Codelco's offer to roll over the $88 a tonne price premium for metal deliveries in 2021, sources told Reuters.
OTHER METALS: LME nickel was up 1.5% at $15,384 a tonne, zinc rose 1.1% to $2,569.50, lead gained 1.2% to $1,819 and tin was 1.5% up at $18,035.
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