Shortages Help Aluminum Toward 13-Year Highs

LONDON, Oct. 4 (Reuters) – Aluminum prices hit 13-year highs on Monday, boosted by strong demand and significant shortages created by China imposing production restrictions on heavily polluting industries such as cast iron to reduce energy consumption and emissions.

Benchmark aluminum on the London Metal Exchange rose 1.1% to $ 2,888 a tonne at 9:55 a.m. GMT. Last month, prices for the metal used in the transportation and packaging industries hit $ 3,000 per tonne, the highest since July 2008.

A widespread power shortage in China has raised fears of slowing growth and demand as the government focused on limiting use by energy-intensive industries to mitigate the impact on households.

Aluminum smelters can account for up to 7% of China’s overall energy consumption, analysts say, and up to 40% of the cost of producing the metal in China could be attributable to electricity.

“The story of aluminum is by no means over, consumption may be slowing in China, but the rest of the world is still in deficit,” said a fund manager.

DATA: China’s import and export data later this week will be closely watched for clues to base metal growth and demand.

“Headwinds to demand from China have been pronounced since the start of the year in auto production, construction activity and most recently tight electricity markets,” said Michael Widmer, analyst at BoA Securities.

“The fundamental backdrop may remain subdued until auto, property and power issues normalize, although that won’t happen until 2022.”

INVENTORIES: Supported by low inventories, copper prices rose 1% to $ 9,225 per tonne.

In warehouses monitored by the Shanghai Futures Exchange, stocks at 43,525 tonnes are the lowest since June 2009, while stocks in warehouses registered in the LME , to 216,725 tonnes, fell by more than 10%. in the past month.

The drop in inventories and the large holdings of copper warrants have heightened concerns about the supply of the LME market.

This created a premium for the money on the three month contract . The premium was trading at $ 7 a tonne on Friday.

OTHER METALS: Zinc rose 1.3% to $ 3,022, lead added 0.8% to $ 2,159, tin rose 0.7% to $ 34,095, and nickel gained 0 , 6% to $ 18,075. (Reporting by Pratima Desai; editing by Jan Harvey)

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