Supply fears push aluminium to 3-month high

Print this page Posted on : 06-21-2008 by recycleinme.com

Aluminium prices jumped to a three-month high on Friday as investors bought on news a US producer shut down about half its capacity, while copper hit a one-month high. Benchmark aluminium on the London Metal Exchange hit $3,158 a tonne, its highest level since March 14. It was trading up at $3,152 a tonne at 1017 GMT from Thursday's close at $3,070.

Aluminium producer Alcoa said on Thursday it would temporarily idle half the production at its Rockdale, Texas, smelter because of local power supply problems.

Three of the plant's six operating potlines-representing about 120,000 tonnes per year of production-have been shut down as a result of the electricity supply interruptions. ''The Alcoa news has reminded the market of the highly dependent nature of aluminium supply on both the price and supply of power,'' said Mr David Thurtell, analyst at BNP Paribas.

REVIVAL HOPES

Copper traded at $8,430 a tonne, the highest since May 19 and was last at $8,422 from $8,330 a tonne on Thursday. Analysts say gains in the metal used widely in power and construction were based on hopes of economic revival as oil prices fell to around $132 a barrel after earlier this week hitting an all-time high of $139.89. The logic behind investor optimism is that lower energy costs could mean central banks would have more room to cut interest and bolster economic growth and demand.

Zinc was up at $1,960 a tonne from $1,934, lead at $1,879 from $1,811, tin at $22,840 from $22,400 and nickel at $22,725 from $22,200.

Source : Business Line