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 US ban on imports of Russian metal.
Russia produces 6% of the world’s aluminium and US 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 2.5% at $2,300.50 a tonne at 1609 GMT, having risen 3.1% on Wednesday and 2.4% on Thursday following news of the possible US import ban. The metal used in packaging, construction and transport was set to end the week roughly unchanged.
Aluminium inventories rose this week in LME-registered warehouses by 41,400 tonnes 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, the premium on the LME for quickly delivered cash aluminium over the three-month contract dropped from $14.50 on Wednesday to zero.
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.
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