Aluminium slides to lowest price in over four years

Aluminium slid to its lowest level in more than four years on Wednesday as speculators piled pressure on a market already weighed down by a global surplus. Three month aluminium touched a low of $1,748 a tonne, the weakest since July 2009, and closed down 0.9 percent at $1,757. It has been one of the worst performing base metals, with losses of about 15 percent so far this year.
"An excess of production capacity across the globe, massive stockpiles on the LME (London Metal Exchange) as well as off-exchange and fears for the new economic policy in China have reinforced the bearish stance in the longer run," analyst Andrey Kryuchenkov at VTB Capital said.
"The technical break below key support at $1,770 today amplified the sell-off," he said, adding that stops were probably hit after prices fell below this year's low.
Excess output has led to record levels of inventories in LME-registered warehouses of over 5 million tonnes, and analysts say there are several more million tonnes in off-exchange depots.
A trader said the next downside targets would be lows touched during July 2009 of $1,723 and $1,705.
"I do expect scale-down buying starting to come through," he said. "The big worry is the July 2009 low was $1,545."
Other metals were also pressured by a slightly firmer dollar after upbeat US data.
Three-month copper dipped 0.6 percent to close at $7,020 a tonne, adding to modest losses on Tuesday after touching the highest since November 12 on Monday.
"Generally sentiment is quite sombre, and this afternoon there was a slight rebound in the dollar after weekly jobless claims, Chicago PMIs and consumer sentiment," Kryuchenkov said.
The dollar strengthened after US consumer sentiment rose in November and the number of Americans filing new claims for unemployment benefits fell unexpectedly.
A stronger US currency makes it more expensive for foreign investors to buy dollar-priced commodities and typically undermines prices.
Trading volumes in the base metals market were light with the approach of Thursday's Thanksgiving holiday in the United States.
In other metals, zinc lost 0.7 percent to close at$1,872.50 a tonne, while lead dropped 1.0 percent to end at $2,076, tin shed 1.4 percent to finish at $22,575, and nickel fell 1.2 percent to $13,285.