LONDON: Aluminium prices rose on Thursday after a four-session slump as inventories slipped and investors hoped that China would ease its strict COVID-19 restrictions.
Prices of metals, including copper, also got a boost in European afternoon trade as the dollar index deepened losses following US data that showed factory activity pulled back in October. A weaker dollar makes greenback-priced metals cheaper for buyers using other currencies.
Three-month aluminium gained 2.1 percent to $2,215 a tonne by 1600 GMT, after sliding 8 percent over the past four sessions.
“We might see some bounces in metals prices, mostly on rates-related re-positioning and short-covering, but there’s nothing sustainably bullish in this market – it’s still overwhelmingly bearish out there,” said Tom Price, head of commodities strategy at Liberum.
“We’ve noticed that whenever there’s any suggestion of a positive shift in markets, lots of cash piles back in. Fact is, investors worldwide are still ready to re-engage on any green shoots of optimism.” China is considering a cut in the duration of quarantine for inbound visitors from 10 to seven days, Bloomberg News reported, citing people familiar with the matter.
“(It is) sentiment-driven. If they cut quarantine, at least it brings us closer to a reopen, which will have a powerful impact since China consumes a lot,” said Marex analyst Zenon Ho. China’s strict movement and quarantine regulations to curb the spread of the coronavirus have dampened economic growth and demand for metals.
Available inventories of aluminium in LME-registered warehouses slid 18 percent, data showed on Thursday, after owners of over 100,000 tonnes of metal gave notice they want to withdraw their material.
Dampening price gains, however, was other data that showed overall supply was still healthy, with global primary aluminium supply rising 4.3 percent year-on-year in September to 5.7 million tonnes.
Among other metals, LME copper climbed 2.3 percent to $7,558 a tonne, zinc advanced 2.3 percent to $2,965.50, nickel gained 0.8 percent to $22,120 and tin rose 0.2 percent to $19,370. However, lead dropped 0.8 percent to $1,969.