Metals: Aluminium prices fall, under pressure from China's rising output

Marex

16/12/2024 11:45

(Updates prices)
    By Polina Devitt
       LONDON, Dec 16 (Reuters) - Aluminium prices in London
fell on Monday, under pressure from rising output in China and
challenges to the country's economy and consumption as Beijing
braces for more U.S. trade tariffs under a second Donald Trump
administration.
    Three-month aluminium on the London Metal Exchange (LME)
 CMAL3  was down 1.7% to $2,560.50 by 1703 GMT after hitting
$2,559.5, its lowest since Nov. 15.
    Aluminium output in China, the world's biggest producer of
the metal, rose 3.6% from a year earlier in November, while the
country's industrial output grew ahead of expectations.
    "Many will argue that the momentum seen in manufacturing,
where industrial output rose 5.4%, was the result of front
loading by manufacturers ahead of likely U.S. tariffs," said
Alastair Munro, senior base metals strategist at broker Marex.
    Chinese aluminium output was also supported last month by
demand from traders and producers who rushed to ship their
cargoes before a change in export tax rebate policy.
    Amid concerns that this policy change would tighten supply
in Asia, buyers in Japan agreed to pay a global producer a
premium of $228 per ton of aluminium over the benchmark price
for January-March shipments, up 30% from this quarter.
    In Europe, 10 EU countries have proposed further sanctions
on Russian trade, including its output of metals such as
aluminium, a letter seen by Reuters showed.
        The broader markets were disappointed with slower retail
sales growth in China in November, which added only 3.0%,
underscoring the difficulties authorities are having there to
boost domestic consumption.
    The flows in base metals were also influenced by risk
reduction ahead of the Christmas and New Year holidays. "January
volatility is incredibly unloved," Munro said.
    LME copper  CMCU3  rose 0.1% to $9,061.50 per ton. Support
for copper, used in power and construction, came from data
showing that China's new home prices fell at the slowest pace in
17 months.
    Zinc  CMZN3  lost 1.5% to $3,048.50, lead  CMPB3  fell 0.6%
to $1,998, tin  CMSN3  added 0.2% to $29,145, and nickel  CMNI3 
was down 1.2% at $15,670.

 (Reporting by Polina Devitt in London; Additional reporting by
Violet Li; Editing by Jan Harvey and Ed Osmond)
 ((polina.devitt@thomsonreuters.com; Reuters Messaging:
polina.devitt.thomsonreuters.com@reuters.net))
 
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