LONDON: Aluminium prices fell on Friday as rising inventories pointed to ample supply, reversing some of the gains that followed news this week of a possible U.S. ban on imports of Russian metal.
Russia produces 6% of the world’s aluminium and U.S. measures to block trade in its metal could disrupt the market. The London Metal Exchange (LME) is also considering barring Russian metal from its system.
“When the fundamentals are so relatively weak, we would need to see real action for prices to rise,” said Saxo Bank analyst Ole Hansen.
Benchmark aluminium on the LME was down 1.7% at $2,319 a tonne at 1053 GMT, having risen 3.1% on Wednesday and 2.4% on Thursday following news of the possible U.S. import ban.
The metal used in packaging, construction and transport was set to end the week up around 1%.
Aluminium extends losses as China sticks to COVID curbs
Aluminium inventories rose this week in LME-registered warehouses by 41,400 tonne to 367,200 tonnes and in Shanghai Futures Exchange warehouses by 12,293 tonnes to 186,804 tonnes.
In another sign that metal is plentiful, quickly delivered cash aluminium on the LME has dropped back to a small discount versus the three-month contract.
Traders are looking ahead to a congress of China’s Communist Party starting on Oct. 16 that they hope will deliver stimulus measures to boost the economy and metals demand, Hansen and two metals brokers said.
China is the biggest metals user but COVID-19 controls have stifled activity, with analysts polled by Reuters expecting a 3.2% GDP rise this year, far below the official target of around 5.5%.
China’s central bank chief on Friday promised stronger support for the real economy, triggering the biggest gains on Chinese stock markets for five-and-a-half months.
Global stock markets also rose.
In other metals, LME copper was up 0.4% at $7,600 a tonne, zinc rose 1.7% to $2,949, nickel fell 0.3% to $22,350, lead slipped 0.5% to $2,033 and tin was up 0.1% at $20,115.
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