Shanghai aluminium prices hit a 9-1/2-year high on Tuesday, as supply concerns rose after an aluminium hub in top consumer China ordered power cuts and output curbs.
The Chinese city of Baotou in Inner Mongolia, a major aluminium producing region, ordered some shutdowns in a bid to meet its energy consumption targets for the first quarter.
CRU analyst Wan Ling said this could translate to a 100,000-tonne annual aluminium output reduction.
The most-traded April aluminium contract on the Shanghai Futures Exchange climbed as much as 2.6% to 17,980 yuan ($2,766.15) a tonne, a level unseen since August 2011, before easing to close up 0.6% at 17,630 yuan a tonne.
The three-month aluminium on the London Metal Exchange advanced as much as 0.4% to $2,227 a tonne but was last down 0.2% at $2,213 a tonne.
“Figures released by the National Bureau of Statistics pointed to strong aluminium production in China over the first two months,” ING analysts said, referring to an 8.4% annual rise in China’s aluminium output in the first two months of 2021.
“However, investors appear to be more forward-looking, and instead focused on the ongoing production curtailments in Inner Mongolia,” they added.
* Aluminium inventories in LME warehouses were hovering around their highest since March 2017, while stockpiles in ShFE warehouses hit a high unseen since April 2020 last week, latest data showed.
* LME cash aluminium was at a $25.25 discount to the three-month contract, suggesting abundant supply.
* The spread between LME and ShFE aluminium cash prices was last at $229.55 a tonne, hovering near its highest since July 2020 of $267.50 a tonne.
* LME copper fell 1.1% to $9,044.50 a tonne by 0726 GMT and nickel dropped 1% to $16,060 a tonne. The ShFE tin contract declined 1.2% to 174,690 yuan a tonne and ShFE copper was down 1.1% to 66,740 yuan a tonne.
$1 = 6.5000 yuan
Reporting by Mai Nguyen; Editing by Ramakrishnan M. and Subhranshu Sahu