Aluminum Hits Four-Year High on Fears of China Output Cuts

SEATTLE (Scrap Monster):  Aluminum jumped to the highest in more than four years as fears of output cuts in top producer China compounded continuing disruptions in the Middle East.

The industrial metal rose 0.6% to settle at $3,672.50 a metric ton on the London Metal Exchange, the highest since March 7, 2022. Traders are concerned that Chinese smelters will be asked to trim production amid a nationwide inspection of key industries’ energy use and emissions, according to researcher Mysteel Global.

The nation’s aluminum smelters have been running beyond capacity to capitalize on a global shortage caused by the conflict in the Middle East. LME prices have jumped since the start of the war in late February as the effective closure of the Strait of Hormuz dents supply from the region.

Chinese authorities are now moving to rein in that over-production as inventories swell. A smelter in Baise, Guangxi province, has already cut output of molten aluminum, Mysteel wrote, without providing estimates of volumes affected. The steel and oil refining industries will also be targeted, the Ministry of Industry and Information Technology said in a statement on May 13.

Already the biggest producer in the world, China’s daily aluminum output rose to a record 129,000 tons last month, according to official data.

LME copper swung between gains and losses before settling 0.3% lower at $13,623.50. Investors monitored progress toward a possible deal to end the war in the Middle East. The red metal rose near-record highs this month following a flurry of bets on the metals needed for the build-out of infrastructure linked to the artificial intelligence boom.

Other base metals were mixed, with zinc down 0.3% while tin was up 1.1%.

Courtesy: www.finance.yahoo.com