Aluminium rose for a fifth straight session on Thursday, touching its highest price in more than three weeks on supply tightness and a softer dollar, which also boosted other industrial metals.
Benchmark three-month aluminium CMAL3 on the London Metal Exchange was up 0.8% at $3,308.50 a metric ton as of 1600 GMT. The metal earlier hit $3,328.50 for its highest price since August 12.
“Aluminium is supported by physical market tightness and expectations of firmer seasonal demand in China,” said Ewa Manthey, commodities strategist at ING.
LME aluminium stocks MALSTX-TOTAL of 245,975 tons are at their lowest level since 1990. In top metals consumer China, Shanghai Futures Exchange inventories AL-STX-SGH have fallen for 11 weeks running, from a six-year high of 528,885 tons on June 12 to 391,498 tons.
Analysts expect the aluminium market to remain in deficit this year despite hopes for returning supply from smelters in the Middle East, which accounts for about 9% of global capacity.
Copper CMCU3 also gained 0.8% to $14,327.50 a ton as the LME complex was boosted by a weaker dollar and fading expectations that the U.S. Federal Reserve would raise interest rates this month. A weaker U.S. currency makes dollar-denominated metals more affordable for holders of other currencies.
U.S. copper imports hit a monthly record high of around 225,000 tons in July, data showed on Thursday.
The LME copper curve remained in backwardation, indicating near-term tightness, but the premium of the cash contract over the three-month forward CMCU0-3 has narrowed to $68 a ton, from more than $500 on August 17, as available stocks MCUSTX-TOTAL have edged higher.
Backwardation is a market structure where the price for prompt delivery is higher than prices of future contracts.
Zinc CMZN3, meanwhile, climbed 1.1% to $3,904.50 after striking a four-year high near the $4,000 mark on Tuesday.
The three-month zinc backwardation CMZN0-3 was at a steep $138 even after 9,975 tons of deliveries into LME warehouses on Wednesday somewhat eased the tightness. Available, or on-warrant, LME zinc inventories MZNSTX-TOTAL now stand at 80,225 tons.
One entity holds more than 50% of the LME zinc warrants and cash contracts, exchange data shows, giving it a high degree of control over nearby physical supply.
Elsewhere, lead CMPB3 gained 0.5% to $1,903.50 a ton while tin CMSN3 added 1.1% to $54,840 and nickel CMNI3 shed 0.7% to $16,800.
(Reporting by Tom Daly; Additional reporting by Solomon Cefai and Pratima Desai; Editing by David Goodman and Paul Simao)
