Aluminum rose in London, heading for the biggest weekly gain in 21 years, as inventory figures signaled a possible pickup in demand for the lightweight metal. Aluminum earmarked for shipment from warehouses registered with the London Metal Exchange jumped almost 15 percent to 81,375 metric tons, daily figures showed today. That was the highest since April 17 and accounted for about 1.9 percent of total inventories. “Some distributors are showing renewed buying interest on concern that they will not be prepared to meet orders when demand returns,” Deutsche Bank AG analysts Michael Lewis and Joel Crane said today in an e-mailed report. Aluminum for three-month delivery added $24.50, or 1.6 percent, to $1,589 a metric ton at 1:12 p.m. local time on the LME. The contract has added 10 percent this week, closing in on the largest gain since June 1988, after sliding for three weeks. Industries from packaging to aerospace use aluminum, which has risen 3 percent this year in London, the least among the LME’s six main metals. Copper has soared 64 percent, and lead is up 66 percent. Aluminum futures open interest, or the number of contracts outstanding, rose to a record 829,336 lots as of yesterday, according to the LME. The increase suggested investors were making purchases, which may represent new bets on higher prices, Deutsche Bank’s Lewis and Crane said. Excess Supply Still, LME-monitored aluminum stockpiles have tripled in the past year. Supply will exceed demand by 380,000 tons this year, below 2008’s 1.29 million tons, according to the analysts. “The world is swimming in excess aluminum,” Deutsche Bank said. United Co. Rusal, the world’s largest producer of aluminum, said June 3 it expects a “significant improvement” in the metal’s price from the third quarter as the global economy rebounds. Copper for three-month delivery added $32.75 or 0.7 percent, to $5,057.75 a ton on the LME, for a 4.7 percent weekly gain. Copper for July delivery was little changed at $2.3020 a pound on the New York Mercantile Exchange’s Comex division. Stockpiles of the metal monitored by the LME dropped 3,225 tons to 299,975 tons. Inventories tracked by the Shanghai Futures Exchange have jumped 15,263 tons, or almost 51 percent, to 45,480 tons this week. Including Comex stockpiles, inventories totaled 396,999 tons, up 1 percent for the week. No Improvement Optimism about an economic rebound has helped to drive copper and other metals higher this year. Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich, said today by phone he has yet to see any signs of improved demand and Western economies remain in recession. “As demand continues to be weak, metals can’t rally indefinitely,” he said. Three-month copper’s relative strength, a technical indicator used by some investors to suggest possible gains or drops, has climbed to 65.85, Bloomberg data shows. That’s close to the level of 70 that technical analysts say signals a probable decline. Commodities as measured by the Reuters/Jefferies CRB Index rose 2.7 percent yesterday after the report on claims for unemployment benefits. Industrial metals and oil extended the climb today. U.S. employers probably cut 520,000 workers from payrolls in May, the smallest drop in seven months, according to the median estimate of 75 economists in a Bloomberg News survey. The report is due today at 1:30 p.m. London time. Other figures released this week showed that fewer Americans filed claims for jobless benefits and sales of previously owned homes advanced. “Investors have called for a slight improvement in the job market,” Merath said. “The numbers we’ve seen in the past couple of weeks came out better than expected.” Among other LME metals for three-month delivery, nickel slipped 0.3 percent to $14,6500 a ton, and lead added 0.3 percent to $1,670 a ton. Zinc gained 0.4 percent to $1,582 a ton, and tin fell 1 percent to $14,560 a ton.

Source