LONDON: Aluminium prices were driven higher on Monday by supply concerns after reports that smelters in top producer China were curbing production.
Three-month aluminium on the London Metal Exchange (LME) advanced 1.7% to $2,428 a tonne in official open-outcry trading after slipping by 0.3% on Friday.
Aluminium output in one of China’s major producing provinces, Yunnan, is set to decline after fresh cutbacks were ordered, analysts said.
“It looks like the market is finding some support from the pick up in aluminium prices with production being curbed further in Yunnan province,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“There are still plenty of supply concerns underpinning metals prices.”
An additional 415,000 tonnes of aluminum smelting capacity was ordered to be cut in Yunnan over the weekend, Citi said in a note. China’s aluminium output last year rose 4.5% from the previous year to a record high, boost by new capacity and a relaxation of power supply restrictions.
The most-traded aluminium contract on the Shanghai Futures Exchange rose 1.4% on Monday to 18,775 yuan a tonne.
A weaker dollar also supported metals prices, making commodities priced in the U.S. currency less expensive for buyers using other currencies.
LME aluminium prices have been weak recently, sliding by 9% since Jan. 26 after large gains in inventories. LME aluminium stocks have jumped by 56% over the past month.
All LME prices were firmer on Monday as additional impetus was provided by a survey showing that home sales in 16 Chinese cities rose for a third consecutive week, with more support measures and the end of Beijing’s zero-COVID policy helping to stabilise demand.
LME copper was up 0.6% in official activity at $9,043 a tonne after touching its highest in more than two weeks while zinc rose 0.5% to $3,074.50.
Lead gained 1.5% to $2,095, nickel jumped 2.2% to $26,350 and tin was up 1.3% at $26,200.
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