LONDON: Aluminium prices retreated on Wednesday as investors took profit from an eight-session rally and technical resistance capped gains.
The most traded three-month contract for aluminium on the London Metal Exchange was down 1% at $2,477 per metric ton during official ring trading. It fell from a five-week high on Tuesday, when prices of the raw material alumina in China reached their highest in three months. Ole Hansen, head of commodity strategy at Saxo Bank said, said the pause was technical and “not driven by changes in fundamentals”.
Funds are repositioning as aluminium prices edge away from the major $2,500 technical barrier, he said. Raw material supplies remained tight for aluminium, as the rainy season disrupted bauxite shipments from Guinea. Ex-China production cuts also lowered global supplies. Copper, meanwhile, recovered by 0.6% to $9,257.5 a ton with further gains capped by a five-year high stockpile in warehouses monitored by LME. Growth in metals inventory is viewed by the market as a sign of weak consumption.
Market participants are looking ahead to US Federal Reserve Chair Jerome Powell’s comments on Friday for clues about the speed of the US monetary easing cycle, which is likely to influence the dollar with implications for trade in dollar-denominated commodities.
Among other metals, lead climbed 1.4% to $2,082, after touching a three-week high of $2,089.5 following a drop in LME inventory in Asia. Lead stocks had shrunk by 21% to 185,500 metric tons since the start of August. Its sister metal zinc increased 1.5% to $2,846. Tin gained 1.2% to $32,650 and nickel lost 0.9% to $16,885.
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