Aluminum prices advanced to their highest in nearly two years on Tuesday as speculators bought on expectations of further tightness in China, which would be only partly offset by higher output in the top producer and consumer.

Benchmark aluminum on the London Metal Exchange (LME) climbed 1.5% to $1,980 a tonne by 1700 GMT, its highest since December 2018.

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LME prices for the metal used in the aerospace industry and canned goods have risen by about a third since March and prices on the Shanghai Futures Exchange are at three-year highs.

But analysts said the rally could be overdone.

“That China became a net importer of metals was a valid driver for prices to bottom, but the price has skyrocketed since March,” said Gianclaudio Torlizzi at the T-Commodity consultancy in Milan.

“At current prices Chinese smelters are making good money and they will increase production.”

DEMAND: Analysts at UBS said in a note that China’s apparent demand is up 15% year to date, with strong end-user demand for UHV cable, automotive, photovoltaics and appliances.

“The global aluminum market is oversupplied in 2020 but there is currently genuine tightness in China, which is driving the recent price strength.”

The consensus forecast in a Reuters survey of analysts showed the aluminum market in surplus by about two million tonnes this year.

CHINA OUTPUT: The world’s top aluminum maker, churned out a monthly record of 3.2 million tonnes in October, up 9.7% from a year earlier, as new smelting capacity ramped up to cash in on strong prices.

POSITIONING: Speculators remained bullish on rising LME aluminum prices, with the net long position reaching 4.9% of open interest at Friday’s close, estimates by brokers Marex Spectron showed.

This was close to a multi-year high of 6.6% touched on Oct. 19, the broker said.

PRICES: LME copper fell 0.6% to $7,063 a tonne while zinc gained 0.7% to $2,697.50, its strongest since May last year.

Tin rose 1.6% to $19,045, its highest since June 2019, while lead advanced 1.3% to $1,936.50 and nickel added 0.3% to $15,935. (Additional reporting by Enrico Dela Cruz in Manila Editing by Barbara Lewis and David Goodman)