METALS-Falling Thermal Coal Prices Drag Aluminium Lower

Coal prices slumped to their lowest in more than a month, hitting its daily 10% loss limit, after China’s state planner asked major coal-producing provinces to investigate and regulate illegal storage sites and to crack down on hoarding.

Aluminium smelting is energy-intensive and up to 40% of the metal’s production costs in China could be accounted for by power.

A power crunch in China has underpinned aluminium prices and Commerzbank analyst Daniel Briesemann said that the renewed scrutiny of the domestic coal market to ease the power shortage is behind Wednesday sharp price drop.

A global shortage in magnesium, a key ingredient in aluminium alloys, has added to concerns, with analysts warning that this could result in demand destruction for lightweight aluminium used in automobiles and cans.

Three-month aluminium on the London Metal Exchange (LME) shed 3.7% to $2,725.50 a tonne in official trading rings after touching its lowest since Sept. 3.

RUSAL: Russian aluminium producer Rusal said the aluminium market deficit of 1.1 million tonnes in the first nine months of 2021 compared with a 2.2 million tonne surplus in the same period a year ago.

INVENTORIES: Stocks of aluminium in warehouse monitored by the Shanghai Futures Exchange are at their highest since early July at 269,582 tonnes, weighing on prices. 

INVENTORIES: Stocks of aluminium in warehouse monitored by the Shanghai Futures Exchange are at their highest since early July at 269,582 tonnes, weighing on prices.

On-warrant stocks in LME-registered warehouses are hovering at their lowest since 2019 at 621,150 tonnes. 

On-warrant stocks in LME-registered warehouses are hovering at their lowest since 2019 at 621,150 tonnes.

OTHER METALS: LME copper shed 1.9% to $9,600 a tonne, zinc lost 2.9% to $3,326, lead fell 1.7% to $2,380.50, tin was down 0.9% at $37,100 and nickel ceded 2.2% to $19,650.