LME aluminium rises above $2,800/t amid general uptrend

Base metals futures on the London Metal Exchange mostly rose during morning trading on Wednesday December 22, with the exception of tin, which experienced a mild drop.

The three-month aluminium price gained 2% to $2,808 per tonne from a closing price of $2,754 per tonne on Tuesday. This is the first time since October 27 that the lightweight metal has traded above $2,800 per tonne.

“We are sticking with the view that the uncertainty over European energy supply, reduced aluminium output from China due to power-rationing and the geopolitical risk surrounding an escalation in tensions between Ukraine and Russia should keep the LME aluminium price elevated for now,” Fastmarkets analyst Andy Farida said.

Forward spreads for the lightweight metal have also spurred bullish sentiment in the physical market, with the cash-to-three-month spread most recently at a $20.70-per-tonne contango.

Fastmarkets assessed the aluminium P1020A premium, in-whs dup Rotterdam at $260-270 per tonne on Tuesday December 21, widening upward by $10 per tonne from $250-270 per tonne a day earlier and $25-30 per tonne higher than $230-245 per tonne two week earlier.

Meanwhile, the three-month zinc price, at $3,470 per tonne, was up by 1.3% on Wednesday morning, compared with $3,427.50 per tonne at 5pm on Tuesday.

LME inventory levels for the metal most recently stood at 203,900 tonnes, with warrants for 21,725 tonnes freshly cancelled on Wednesday morning by 9am, leaving on-warrant material at 152,025 tonnes.

The three-month copper price also rose. The contract was at $9,574 per tonne on Wednesday morning, up by $40 per tonne from $9,534 per tonne at the end of Tuesday.

“Copper stood out as its year-to-date change of -9,709 lots reflects that there was more selling than buying this year,” Farida said.

“This suggests that LME fund managers lack the confidence to increase their bullish exposure in copper, and that does not bode well for the red metal,” he said. “With the LME copper price trading mostly sideways with a bearish bias so far in December, it is unsurprising that gross longs were not keen to add,” he added.

Other highlights
• The three-month nickel price was up by 0.5% on Wednesday morning, at $19,705 per tonne, compared with a closing price of $19,615 per tonne on Tuesday.
• Tin was the only base metal to trade lower. The three-month tin price on the LME was down by 0.1%, at $38,645 per tonne, from $38,685 per tonne at the 5pm close on Tuesday.