Shanghai aluminum hits over 2-year high on strong China demand

Shanghai aluminum hits over 2-year high on strong China demand

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Shanghai aluminum prices touched a more than two-year high on Thursday, fueled by a better-than-expected recovery in top consumer China and hopes of sustained demand in the next few months.

The most-traded September aluminum contract on the Shanghai Futures Exchange hit its highest since April 2018 at 14,805 yuan ($2,115.82) a tonne.

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London Metal Exchange’s three-month copper rose 0.2% to $1,728.50 a tonne by 0330 GMT.

“A V-shaped recovery in China props up demand and prices for the metal more than we had anticipated,” Fitch Solutions said in a report, revising its three-month LME aluminum average price forecast for 2020 to $1,690 a tonne from $1,600 earlier.

But growing U.S.-China trade tension and a global resurgence of coronavirus cases posed risks, it added.

China’s finance ministry on Wednesday set an end-October deadline for local governments to complete issuance of special bonds, often used to fund infrastructure projects that consume large amounts of industrial metals.

The U.S. dollar dropped to a two-year trough, making greenback-priced LME metals more attractive to buyers holding other currencies, as the U.S. Federal Reserve left interest rates near zero to support the economy.

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* Aluminum inventories in ShFE warehouses were last at 222,498 tonnes, a 58%-drop from the 2020 peak in March, but LME stockpiles were hovering around their highest level since April 2017.

* Domestic Chinese aluminum prices rose to a two-week high of 14,780 yuan a tonne. The prices hit their highest since November 2017 on July 13 at 15,320 yuan a tonne.

* LME copper rose 0.2% to $6,487 a tonne, while ShFE copper increased 0.2% to 51,890 yuan a tonne. ShFE zinc jumped 2.6% to 18,850 yuan a tonne and nickel advanced 2.1% to 111,830 yuan a tonne.

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