BLBG:Aluminum Drops From Six-Week High as China Opens After Holiday
Aluminum in London declined from a six-week high as markets in Shanghai reopened after a week-long holiday and investors focused on expectations for higher production of the metal in China.
Metal for delivery in three months fell as much as 0.6 percent to $2,154.25 a metric ton on the London Metal Exchange after climbing to $2,174 on Feb. 15, the highest since Jan. 3. Futures for delivery in May on the Shanghai Futures Exchange fell 0.2 percent to 15,205 yuan ($2,436) a ton at 10:14 a.m. local time even after its counterpart in London advanced 2.3 percent last week.
“Expectations for further gains in aluminum production in China mean Shanghai prices are ignoring the gains in London last week,” said Fang Junfeng, an analyst at Shanghai CIFCO Futures Co. “While seasonal demand may increase after this holiday, it still will take a couple of weeks before that actually happens.”
China’s aluminum output gained 13 percent to a record 19.88 million tons last year, according to the statistics bureau. Production is likely to rise to 23.25 million tons this year on additions of low-cost smelters in the northwestern regions of the country and government subsidies to uneconomic smelters, Barclays Plc said in a report on Feb. 15. The bank, which forecast a global surplus of 1.8 million tons this year, said investors should consider taking short positions in the alloy at current price levels.
Copper for delivery in three months on the LME fell 0.2 percent to $8,187 a ton, while its counterpart in Shanghai dropped 1 percent to 59,120 yuan a ton. On the LME, zinc, lead and nickel declined. Tin was little changed.
To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net
To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net
