Aluminum prices touched their lowest level in a month on Tuesday as investors worried that rising production would add to surpluses, while copper rose on hopes a U.S. aid package would boost economic activity.
Three-month aluminum on the London Metal Exchange was down 1.6% at $1,998 a tonne by 1145 GMT after touching $1,982, its lowest level since Nov. 27.
Global primary aluminum output climbed 4.1% year on year, data showed last week, while the daily production figure increased to the second highest level on record, according to Capital Economics.
“With aluminum, you can’t argue that the metal is in short supply. There are production increases pretty much across the board and new capacity is being energized,” said independent consultant Robin Bhar.
“You may be getting some RV (relative value) trades coming through, long copper and short ali being placed ahead of the new year.”
Other investors were likely adjusting their portfolios ahead of the end of the year, he added.
In China, aluminum prices on the Shanghai Futures Exchange dropped as much as 2.9% to 15,295 yuan ($2,341.01) a tonne, the lowest in nearly six weeks.
The decline follows a broader sell-off in Chinese equities as investors booked profits before the year-end after a rally driven by hopes for a stellar economic recovery.
Credit: Financial Post