Aluminium prices have touched $3,000 a tonne for the first time since 2008, as restrictions on output in China fuelled fears that supply will run short.
Prices have leaped 50% this year and nearly 15% in only three weeks as speculators pile into the market.
The benchmark contract on the London Metal Exchange (LME) was down 1% at $2,894.50 a tonne at 1600 GMT after touching $3,000.
Gianclaudio Torlizzi at consultants T-Commodity commented on the economic status of aluminium,
“The market is obviously a bit over-extended here,”Gianclaudio Torlizzi at consultants T-Commodity
But he said prices would likely rise after a correction, thanks to the Chinese output cuts, a rapid increase in the price of alumina, from which aluminium is made, dwindling exchange stockpiles and strong demand.
The Yunnan province in china is home to about 10% of China’s aluminium capacity. The province has told smelters using hydropower to keep average monthly output for September-December at August volumes or lower.
Yunnan aluminium smelters had already shut down nearly 1 million tonnes of annual capacity by August, researcher Antaike said this month.
ALUMINA: Futures of the aluminium ingredient on the Comex exchange have surged 20% this month to $365 a tonne.
Martin Jackson, senior analyst aluminium, at CRU Group said:
“ On top of the strongest demand growth in over a decade, production cuts in south China and a coup in Guinea have spooked the market. A frenzied price rally means even marginal producers are making close to $1,000 for every tonne of aluminium produced.”Martin Jackson, senior analyst aluminium, at CRU Group
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