Aluminium prices fell to one-week lows on Monday as worries about supplies receded after a Brazilian court approved emergency waste measures that could allow the world's biggest alumina refinery to resume production. Last week, Norsk Hydro was granted a permit in Brazil to use new technology to extend the life of a disposal area for its Alunorte alumina refinery which would mean the restart of 50 percent of production of alumina, a feedstock for aluminium.
Benchmark aluminium on the London Metal Exchange ended down 3.0 percent at $2,067 a tonne.
The metal used in transport and packaging earlier touched a Sept. 28 low of $2,044.50 and is down about 9 percent since hitting a 3-1/2-month peak at $2,267 last Thursday.
"The Alunorte news means no imminent tightening of the aluminium market from upstream supply disruptions and no further cost inflation on the alumina side," said Julius Baer analyst Carsten Menke.
Inventories of the metal in LME approved warehouses at 963,350 tonnes have more than halved since January 2017, creating nervousness about nearby supplies on the LME market.
Cancelled warrants - metal earmarked for delivery and so no longer available to the market - at nearly 37 percent have also reinforced concerns about a tight LME market.
This is one reason why the discount for the cash over the three-month contract has narrowed to around $2 a tonne from near $40 a tonne in early September.
Concerns about economic and demand growth in China were fuelled by the country's central bank slashing the level of cash that banks must hold as reserves, stepping up moves to lower financing costs and spur growth.
Beijing has stepped up liquidity support across the financial system this year to calm fears of capital outflows and the damage to China's economy from a trade war with the United States.
"We remain concerned about the trade situation with China," said INTL FCStone analyst Edward Meir.
"But we think the current trade lull would see prices work higher during October as investors focus on declining metal inventories and the strong likelihood Beijing will ramp up spending as it did in late 2015 and early 2016."
Sliding stocks of copper on the LME market are also a cause for concern, traders said. At 181,975 tonnes, they have more than halved since late March, while cancelled warrants have climbed above 50 percent.
The higher US currency was weighing on industrial metal prices generally, as it makes dollar-priced commodities more expensive for holders of other currencies, potentially subduing demand.
Copper firmed a touch to $6,178.5 a tonne, zinc slid 0.7 percent to $2,615, lead fell 1.2 percent to $1,972, tin slipped 0.4 percent to $18,900 and nickel shed 0.4 percent to $12,575.
Comments
Comments are closed.