Aluminium futures on the Shanghai Futures Exchange (ShFE) rose to their highest in nearly six months on Monday, following a drop in inventories last week and as investors expect a stronger demand in the second quarter.
The most active aluminium contract on ShFE jumped to as high as 14,200 yuan ($2,115.36) a tonne, the highest since Oct. 31, after data on Friday showed that aluminium stocks in warehouses tracked by ShFE AL-STX-SGH dropped to 665,067 tonnes, their lowest since November 2017.
“(The second quarter) should be a strong demand season, so this would probably give aluminium price a bit of support. Macro data released last week is kind of strong, much better than expectations for GDP and also real estate,” said Jackie Wang, a China-based analyst for metals consultants CRU.
The contract last week broke the 14,000-yuan barrier, considered an average break-even for Chinese aluminium smelters, for the first time in four-and-a-half months on an improved outlook for the metal in China, the world’s biggest user.
But investors are cautious about how high aluminium prices can go, as the Chinese government is unlikely to give a strong stimulus to the construction sector, the top user of aluminium, to avoid a property bubble, Wang said.
“We still think demand growth in 2019 will be slower than 2018,” she added.
* SHANGHAI PRICES: The most active copper contract ended down 0.3 percent at 49,250 yuan a tonne, nickel fell 0.5 percent, while lead advanced 0.6 percent and zinc rose 0.5 percent.
* COPPER: China’s refined copper output in March rose 10.2 percent from a year earlier to 705,000 tonnes in March, the country’s National Bureau of Statistics said on Friday. However, that is the lowest monthly total in records on the bureau’s website since June 2016.
* JTXG/COPPER: Japanese miner JXTG Holdings declined to comment on a media report that it is exploring the sale of its majority-owned Caserones copper mine in Chile.
* SCRAP: Chinese authorities will start accepting applications for licences to import unspecified quantities of soon-to-be-restricted types of scrap metal from late May, the recycling branch of the China Nonferrous Metals Industry Association said on Saturday.
* CHINA ECONOMY: China will maintain policy support for the economy, but will also push forward structural deleveraging and prevent speculation in the property market, suggesting attention may be turning back to debt risks that any further substantial stimulus measures may create.
* HOLIDAY: The London Metal Exchange is closed for a public holiday and will be open again on Tuesday.