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LME Aluminium Near 6 Month Peak as Demand Recovers

4 Aug 2020 5:18 pm
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Mumbai (Commodities Control) – Aluminium prices held near six-month highs on Tuesday as rebounding Chinese demand fuelled expectations of a tightening market.

Benchmark aluminium on the London Metal Exchange (LME) was down 0.3% at $1,746.50 a tonne by 1104 GMT, having jumped by 2.2% on Monday.

The metal used in transport and packaging has risen 20% from a low in April as the coronavirus outbreak spread globally.

Supporting prices are a recovering auto industry and China, where high local prices have sucked hundreds of thousands of tonnes of metal to the country and stockpiles remain low, said Julius Baer analyst Carsten Menke, adding that prices are unlikely to rise above $1,900 because idled plants would resume production.

Germany's car industry has seen demand picking up, a survey by the Ifo economic institute showed. A shift to electric vehicles has created a new and substantial demand stream for aluminium.

Analysts at Citi forecast LME aluminium cash prices to be around $1,700 in the fourth quarter, rising to $1,900 in 2021 and $2,000 in 2022.

They said a demand recovery could move the global market from a 2.5 million tonne surplus in 2020 to a 1.7 million tonne deficit by 2023.

China's aluminium imports have surged to their highest in years. Stocks in Shanghai Futures Exchange warehouses, at 221,819 tonnes, are down from more than 500,000 tonnes in April.

Inventories in LME-registered warehouses, however, have risen to 1.6 million tonnes from about 970,000 tonnes in March.

(Commodities Control Bureau)

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