LONDON, Jan 19 (Reuters) – Aluminium prices slipped to their
lowest in two months on Tuesday as inventories and production
climbed, raising fears of larger surpluses.
Three-month aluminium on the London Metal Exchange
was down 0.8% at $1,956 a tonne by 1150 GMT after touching
$1,945, the weakest since Nov. 16.
“In the short term, you have those inventory rises from both
markets, China and ex-China, which is capping the upside of
aluminium,” said Wenyu Yao, senior commodities strategist at ING
Bank.
LME inventories <MALSTX-TOTAL> have jumped by 10% over the
last two days to 1.41 million tonnes, while stocks in warehouses
registered with the Shanghai Futures Exchange have gained 12%
over the last month.
The stock gains in China were expected ahead of the Lunar
New Year holiday, which kicks off in mid-February, Yao added.
China’s aluminium production in 2020 rose 4.9% from the
prior year to a record 37.08 million tonnes as smelters cashed
in on soaring prices, with December output hitting a monthly
all-time high.
Traders have been expecting LME aluminium prices to stall
after they surged 44% from April last year to the highest in
over two years in December.
* LME copper prices added 0.4% to $8,001 a tonne as
global investors awaited an upcoming speech by U.S. Treasury
Secretary nominee Janet Yellen that could determine the tone of
policy in the world’s largest economy.
The speech by Yellen, President-elect Joe Biden’s nominee to
run the Treasury Department, will likely give an indication
about the direction of the dollar, a factor affecting
greenback-priced metals on the LME, and over a further stimulus
programme from Washington.
* News that China reported the worst outbreak of COVID-19
since March 2020, while virus infections in other major
economies remained high dampened sentiment.
* LME nickel edged up 0.1% to $18,080 a tonne, zinc
lost 0.3% to $2,674, lead rose 0.3% to $2,003
and tin was barely changed at $21,240.
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(Reporting by Eric Onstad; editing by Barbara Lewis)
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