On November 23, 2019, employees at a factory in Zouping, Shandong Province, China, work on an aluminum coil production line. REUTERS/Stringer
Reuters, London, August 31-Aluminum prices hit a more than 10-year high on Tuesday, and smelters in China, a major producer, face stricter power controls, triggering concerns about the supply of this energy-intensive metal.
The Guangxi region of China, which is the center of aluminum and alumina production, called for greater control of energy consumption in a statement issued after a conference call on Monday.
According to the National Bureau of Statistics, the region is the third largest alumina producer in China. Alumina is the main product of aluminum. The output in July was 925,500 tons.
Production restrictions in China's smelting areas are usually aimed at alleviating pressure on the power grid, which supports aluminum prices.
Wood Mackenzie analyst Uday Patel said that a series of announcements from China about the challenges facing smelters, coupled with soaring global demand, supported prices.
He said that China's output this year will still increase compared to last year, despite the slowdown in growth, adding that its output is about 500,000-600,000 tons lower than expected in early 2021.
At the same time, Mysteel Consulting stated that the eight aluminum smelters in Guangxi will have to maintain their September output at 80% of the highest monthly average output in the first half of the year.
It stated that this could be equivalent to a reduction of 475,000 tons of annual operating capacity.
In 1635 GMT, the benchmark three-month aluminum rose 2.7% to US$2,722 per ton, after hitting the highest point since May 2011 of US$2,726.50.
The October aluminum contract with the largest trading volume on the Shanghai Futures Exchange closed up 1.2% to 21,390 yuan ($3,311) per ton, hovering near the highest level since August 2008.
Spread: The LME spot aluminum contract is at a premium of US$21 per ton compared to the three-month contract, indicating that the supply has been tightening recently.
Dominant positions: LME data shows that large positions, which account for 50-80% of available inventory, have exacerbated tensions.
Other prices: LME copper rose 1.3% to US$9,530 per ton, zinc was flat at US$3,002, lead fell 1.5% to US$2,262, and tin rose 1% to US$33,900.
Supported by low inventories and increased demand, nickel prices rose 3.2% to US$19,610, and hit a record high in the previous period.
Our standard: Thomson Reuters Trust Principles.
Subscribe to our daily featured newsletter to receive the latest exclusive Reuters reports sent to your inbox.
Reuters, the news and media division of Thomson Reuters, is the world's largest multimedia news provider, reaching billions of people around the world every day. Reuters provides business, financial, domestic and international news directly to consumers through desktop terminals, world media organizations, industry events and directly.
Rely on authoritative content, lawyer editing expertise, and industry-defining technology to build the most powerful argument.
The most comprehensive solution to manage all complex and expanding tax and compliance needs.
The industry leader in providing online information for tax, accounting and financial professionals.
Access unparalleled financial data, news, and content with a highly customized workflow experience on desktop, web, and mobile devices.
Browse an unparalleled combination of real-time and historical market data and insights from global resources and experts.
Screen high-risk individuals and entities around the world to help discover hidden risks in business relationships and interpersonal relationships.
All quotes are delayed by at least 15 minutes. Please see the complete list of exchanges and delays here.