The price of aluminum at the highest level for 13 years
Aluminum prices in Shanghai climbed to their highest level in more than 13 years on Monday amid supply issues in China and optimistic sentiment after US Federal Reserve Chairman Jerome Powell adopted a more conciliatory tone in a long-awaited speech.
The most traded October aluminum contract on the Shanghai Futures Exchange rose 4.2% to 21,550 yuan ($ 3,332.41) per tonne, its highest level since August 1, 2008, before edging down decline to close at 21,495 yuan per ton, still up 3.9%.
The metal has jumped over 30% this year, just behind tin among the six base metals traded on the London Metal Exchange, propelled by the global economic recovery.
A prefecture in China’s Xinjiang region imposed production limits on five aluminum smelters from August as part of efforts to stamp out illegal production. The move follows several disruptions in aluminum production due to power cuts in China earlier this year.
“Electrolytic aluminum production in August could drop due to the dual control of reducing household electricity and energy consumption,” Huatai Futures said in a report.
A major fire at a Jamaican alumina refinery earlier this month also helped push premium buyers to pay for aluminum shipped to the U.S. Midwest to new highs.
Powell’s wait-and-see approach in his speech on Friday reassured investors and market participants that the central bank’s extraordinary efforts to support the economy were likely to support riskier assets a bit longer.
“We will carefully assess the incoming data and the evolution of risks. Even after our asset purchases are complete, our high holdings of long-term securities will continue to support accommodative financial conditions, ”said Powell.
Last week, China announced it would release its third batch of metals from state reserves on September 1 as part of its ongoing campaign to control prices and prevent commodity inflation from hurting growth .
The National Administration of Food and Strategic Reserves said on Friday that it would sell 70,000 tonnes of aluminum, 50,000 tonnes of zinc and 30,000 tonnes of copper, quantities in line with two previous auctions held in July.
