LONDON: Aluminium prices dropped to their lowest in more than three months on Tuesday on concern about oversupply while copper also slumped after weak economic data from top metals consumer China.
Three-month aluminium on the London Metal Exchange (LME) fell 1.9% to $2,416 a metric ton by 1600 GMT, its lowest since April 11.
LME aluminium has shed 14% since hitting its highest in nearly two years on May 30.
Metals extended losses in the European afternoon as stronger than expected US retail sales data for June gave the dollar a boost. A firmer US currency makes dollar-priced commodities more expensive for buyers using other currencies.
Leading producer China registered its highest aluminium output in nearly a decade last month, helped by a resumption of production in Yunnan province thanks to heavy rains that boosted hydropower supply.
“In theory, there’s a capacity cap in China, but there’s no immediate signs that’s having an impact,” said Dan Smith, head of research at Amalgamated Metal Trading (AMT).
In 2018 China set a national aluminium capacity cap of 45 million tons as part of efforts to control power consumption in the energy-intensive sector.
The industry had established total annual production capacity of 44.43 million tons by the end of 2023, state-backed research house Antaike said in January.
LME copper dropped 1.4% to $9,673 a ton, still under pressure from weak Chinese economic data released on Monday.
US Comex copper futures lost 1.6% to $4.44 a lb.
“The main headwind is China. And we also have algo models that are starting to roll over to sell signals,” AMT’s Smith said, referring to algorithmic computer models that place buy and sell orders largely on momentum signals.
Copper inventories in LME-approved warehouses, Comex warehouses, bonded warehouses in China and warehouses designated by the Shanghai International Energy Exchange have risen this month, pointing to weak demand.
In other metals, LME zinc slid 2.3% to $2,888.50 a ton, lead lost 0.2% to $2,183.50, tin dipped 0.3% to $33,150 and nickel was down 0.3% at $16,660 for its weakest since March 28.