Aluminium prices dipped on Tuesday as a spike in COVID-19 cases in China, depressing hopes that the world’s top metals user will relax rigorous controls.
Guangzhou, The major hub for global industry, have seen a rise in new coronavirus cases on Tuesday, pushing the city’s capacity to escape a shutdown a la Shanghai to the strain.
By 1100 GMT on the second day of declines, benchmark aluminium on the London Metal Exchange CMAL3 were dropped 0.8% at $2,317.50 per metric ton.
On Friday, industrial metals like aluminium, copper. And others surged on expectations that China might relax its strict COVID-19 regulations. Which could increase demand for metals.
Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. Said that although the factors that drove the surge have somewhat weakened. It does make sense that we’re seeing a retracement. “It was a spectacular rally on Friday,” he added.
“The market is currently undergoing consolidation. The trigger for that to happen still isn’t strong enough, but it appears to want to move higher.
Low stockpiles and worries over supplies have supported copper. Which surged 7.1% on Friday, its highest one-day increase since January 2009. After initially testing lower on Tuesday, LME copper increased 0.3% to $7,935 a tonne.
On the (SHFE), the most actively traded December copper contract increased 0.3% as 65,780 yuan ($9,061.) a metric ton.
After falling 43% over the previous month. LME copper inventories reached their lowest level in more than seven months on Tuesday.
In China, inventories in SHFE & bonded warehouses were 84,164 tonnes, close to the historic lows of 72,159 tonnes set in October.
Lead down 1% to $2,015.50 per tonne and zinc decreased 0.6% to $2,868 per tonne on the LME. Whereas nickel increased 0.3% to $23,455 & tin increased 2.4% to $19,400.