Aluminum prices drop on signs of high China supply

NEW YORK: Aluminum fell, capping the biggest weekly drop in 14 months, on signs that increasing output in China will add to a global glut. Global output increased 5.7 per cent in January from a year earlier to 3.917 million tonne, the International Aluminium Institute said February 20. Chinese production surged 16 per cent, the IAI figures showed. Production exceeded demand by 419,400 tonne last year, figures from the World Bureau of Metal Statistics showed this week.

“The high production is not helping reduce the supply surpluses on the global aluminum market, which are still reflected in high inventory levels,” Commerzbank analysts including Frankfurt-based Daniel Briesemann said in a report. “The high supply is likely to block any significant increase in aluminum prices.”

Aluminum for delivery in three months dropped 1.3 per cent to settle at $2,048 a ton on the London Metal Exchange at 5:51 pm local time. This week, the price tumbled 5.5 per cent, the most since late November 2011. The commodity fell for the fifth straight day, the longest slump in two months.

Inventories monitored by the LME climbed 0.1 per cent to 5.16 million tonne, the highest in more than three weeks. Copper for delivery in three months fell 0.8 per cent to $7,801 a tonne ($3.54 a pound).

This week, the price plunged 4.9 per cent, the most since December 2011. The metal dropped for the sixth straight session, the longest slump in two months. Zinc and lead declined, while nickel gained.

Tin was little changed. In New York, copper futures for May delivery decreased 0.5 per cent to $3.5505 a pound on the Comex. On Thursday, total volume rose to a record 128,326 contracts, topping the previous alltime high of 127,276 on April 10, CME Group, the Comex owner, said.

On February 6, open interest jumped to a record 184,257 contracts, Chicago-based CME Group said. This week, the price dropped 5.4 per cent, the most since December 2011.