LONDON: Aluminium prices dropped to the lowest in over three months on Tuesday on worries about oversupply, while copper also slumped in the wake of weak economic data from top metals consumer China.
Three-month aluminium on the London Metal Exchange (LME) fell 0.7% to $2,443.50 per metric ton by 0945 GMT, the lowest since April 11.
LME aluminium has shed 13% since hitting a near two-year peak on May 30.
The world’s biggest aluminium producer China churned out the highest output in nearly a decade in June, helped by the resumption of production in the Yunnan province thanks to heavy rains that boosted hydropower supply.
“In theory there’s a capacity cap in China, but there’s no immediate signs that’s having an impact,” said Dan Smith, head of research at Amalgamated Metal Trading.
China in 2018 set a national capacity cap of 45 million tons for aluminium as part of its efforts to control power consumption in the energy-intensive sector.
China June aluminium output climbs on higher profits
The industry had established total annual production capacity of 44.43 million tons by the end of 2023, state-backed research house Antaike said in January.
LME copper dropped 0.6% to $9,748 a ton, still under pressure along with other metals from weak Chinese economic data released on Monday, Smith said.
“The main headwind is China. And we also have algo models that are starting to roll over to sell signals,” Smith added, referring to algorithmic computer models that place buy and sell orders largely on momentum signals.
The most-traded August copper contract on the Shanghai Futures Exchange (SHFE) closed 0.5% lower at 79,280 yuan ($10,911.09) a ton.
Copper inventories in LME-approved warehouses, Comex warehouses, bonded warehouses in China as well as warehouses designated by the Shanghai International Energy Exchange have increased so far in July, pointing to weak demand.
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