LONDON- Aluminum prices touched the highest in over six weeks on Friday after China’s output of raw material alumina slumped last month, highlighting the risk of tight supply due to power shortages.
Three-month aluminum on the London Metal Exchange surged as much as 3.1 percent to $2,749 a ton, the strongest since Nov. 1, before paring gains to $2,733, up 2.5 percent.
China’s output of alumina, which is smelted to make aluminum, fell in November by 4.5 percent year-on-year to its lowest in 18 months, official data showed on Friday.
China aims to lower its carbon output by restricting the electricity consumption and production of power-intensive industries such as alumina refining and aluminum smelting.
“Ali rallied on power issues, market speculating on the potential closure of smelters,” Marex broker Al Munro said in a note.
Investors have refocused on potential shortages of industrial metals after being distracted recently by whether the U.S. Federal Reserve would tackle rising inflation with faster bond tapering and interest rate rises next year, an analyst said.
“The FOMC meeting on Wednesday created a relief rally across risky assets and that means the market can refocus on the internal fundamentals, which are generally supportive,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“Having survived another downside attempt, if we can hold these levels, then potentially we could be gearing up for some fresh upside as we head into 2022.”
