Aluminum prices rose on Tuesday over concerns that a commitment to reduce pollution by top producer China could limit the energy-intensive metal’s supply.
Three-month copper on the London Metal Exchange rose 1.5% to $2,433.50 a tonne by 0647 GMT.
[Click here for interactive aluminum price chart]
“We expect aluminum to remain supported in the short term amid concerns climate change policies in China will curb output,” ANZ analysts told Reuters.
“Coal-fired power is used by more than 80% of China’s aluminum smelters. Pollution-reduction policies are likely to push many of them to hook up to the grid, thereby increasing their costs,” they added.
Chinese production rose by 6.4% in the first quarter, according to the International Aluminum Institute.
However, the year-on-year rise is coming off a low base. China’s aluminum output fell in 2019 due to low prices – the first year of decline this century.
Average daily production in China rose by a marginal 0.3% over the first three months of 2020, equivalent to an annualised 118,000 tonnes, and actually fell in March even as domestic prices were surging higher, according to the Institute.
The official figures from the National Bureau of Statistics generate slightly different production numbers but capture the same trend.
(With files from Reuters)