SINGAPORE, March 25 (Reuters) – London aluminium prices rose on Wednesday after seven straight sessions of losses, as some smelters in China trimmed production to cut losses amid the coronavirus epidemic, but weak demand kept a lid on prices.
Three-month aluminium on the London Metal Exchange (LME) rose 1.3% to $1,568 a tonne by 0705 GMT, while the most traded aluminium contract on the Shanghai Futures Exchange (SHFE) closed up 2.6% at 11,700 yuan ($1,653.34) a tonne, clawing back from a four-year low hit in the previous session.
Chinese aluminium smelters have cut their annual production capacity by up to 340,000 tonnes in response to a coronavirus-driven plunge in prices of the metal, analysts estimate, mostly by placing ageing pots under maintenance.
“In China, smelters’ costs are higher than the current price, so most of them are running in the red. This (capacity cut) can lift prices a little,” said a Beijing-based aluminium analyst.
However, the demand outlook remains weak as inventories in both exchange and off-exchange warehouses are still high and Chinese downstream factories consuming aluminium are running at only 50%-60% operation rate, the analyst said.
Meanwhile, growing hopes for a $2 trillion U.S. stimulus package to curb the economic fallout from the pandemic supported sentiment on the overall base metal market.
FUNDAMENTALS
* STOCKS: Aluminium stocks in warehouses tracked by the ShFE were at a 10-month high of 533,994 tonnes, while inventories in LME-approved warehouses rose to a one-month high of 1.1 million tonnes. AL-STX-SGH MALSTX-TOTAL
* CHINA COPPER: Charges for processing copper concentrate in China have fallen for the first time since December, as the pandemic hit operations at overseas mines and left smelters uncertain over future supply.
* FIRST QUANTUM: Canadian miner First Quantum Minerals Ltd said production at its Cobre Panama copper mine would ramp up at a slower-than-expected pace after several workers contracted the virus.
* OTHER PRICES: LME copper rose 0.9% to $4,858.50 a tonne, lead advanced 2.4% to $1,623.50 a tonne, while ShFE copper increased 3.2% to 39,360 yuan a tonne and ShFE tin rose 4.2% to 116,670 yuan a tonne.
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PRICES
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin
ARBS ($1 = 7.0766 Chinese yuan renminbi)