Aluminum price climbs as tight supply outweighs China demand worries

(Reference image by Pexels, Pixabay).

Aluminum prices rebounded on Tuesday, as declining inventories outweighed demand concerns sparked by rare protests in several Chinese cities against strict covid-19 restrictions.

Three-month aluminum on the London Metal Exchange rose 1.1% to $2,387.5 a tonne by 0221 GMT after closing lower in the previous session.

The most-traded January aluminum contract on the Shanghai Futures Exchange climbed 2% to a five-month high of 19,070 yuan ($2,649.53) a tonne.

Aluminum stocks at LME warehouses dropped 2,575 tonnes to 503,700 tonnes on Monday. Inventories were down 14.2% from 587,100 tonnes on Oct. 26.

Aluminum inventories in warehouses monitored by the SHFE declined 11.9% to 110,017 tonnes last Friday, the lowest since February 2017.

Smelters in northern China are cutting output to reduce pollution during the winter, while the resumption of plants forced to go offline due to power issues has been slower than expected, according to ANZ research.

The market outlook has also been clouded by weak demand in China, with main consumption sectors such as transportation and construction struggling from a slowing economy.

Among other metals, copper was up 0.7% at $8,014 a tonne, zinc added 0.9% to $2,964 a tonne and lead inched higher 0.2% to $2,118.5 a tonne.

Workers at Chile’s Escondida mine accepted a new offer from BHP Group Ltd and will not move forward with a strike that had been planned for Monday and Wednesday, their union said.

SHFE copper gained 0.8% to 65,050 yuan a tonne, nickel advanced 1.6% to 195,740 yuan a tonne, zinc was up 2% at 24,060 yuan a tonne, and tin climbed 2.6% to 185,940 yuan a tonne.

($1 = 7.1975 yuan)

(Reporting by Beijing Newsroom; Editing by Subhranshu Sahu)

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