LONDON- Aluminum prices fell to their lowest in more than three months on Friday as rising coal output in China eased concerns over supply of the metal from smelters powered by the fossil fuel.
Daily coal output in China, the world’s largest producer of aluminum, was close to a record at 11.2 million tons on Nov. 3, helped by measures to ramp up production.
A shortage of coal had pushed prices to unprecedented highs, raising the cost of power.
Electricity accounts for about 40 percent of costs in aluminum production.
Aluminum prices in the short are likely to be dictated by production costs and supply-side policies around power rationing, said London-based brokerage Marex.
Benchmark three-month aluminum on the London Metal Exchange (LME) fell as low as $2,510 a ton, its weakest since July.
Prices for the light metal used in automobiles and beverage cans are down about 20 percent since reaching a 13-year high in mid-October.
“The ongoing fall in coal prices in China amid stronger supply is likely to lower the risk of power shortages … Not only are the risks of disruptions lower, costs of smelting the metal have also declined significantly,” ANZ analysts wrote.
