Aluminium and Nickel Prices Drop to Multi-Month Lows Amid Rising Output
On Thursday, aluminium prices fell to their lowest point in more than three months, while Shanghai nickel prices dropped to a four-month low, primarily due to increased production in key producing countries.
On the London Metal Exchange (LME), three-month aluminium was nearly unchanged at $2,401 per metric ton by 0457 GMT, after hitting a low of $2,394 earlier in the session, the lowest since April 3.
The most-traded August aluminium contract on the Shanghai Futures Exchange (SHFE) fell by 0.8% to 19,640 yuan ($2,706.28) per ton, touching its lowest level since March 28 at 19,590 yuan earlier in the day.
China's primary aluminium output reached its highest level since at least 2014 in June. Producers have benefited from higher profit margins due to a recent price surge and sufficient hydro-power supply in Yunnan.
LME aluminium surged nearly 30% over three months, reaching a two-year high at the end of May.
"China's aluminium production is likely to remain strong in the short term with improving hydro-power generation," said ANZ analyst Soni Kumari. She added that prices might find support at around the $2,300-$2,350 level due to restocking in the second half.
The discount of LME cash aluminium to the three-month contract was at $58.54 per ton on Wednesday, close to the 24-year high of $65.07, indicating abundant near-term supply.
SHFE aluminium inventories rose to 262,200 tons, the highest since April 2023.
Other base metals saw mixed movements. LME copper eased 0.3% to $9,605 per ton, zinc fell 0.5% to $2,834.50, lead edged down 0.1% to $2,187.50, and tin declined 0.7% to $32,715, while nickel rose slightly by 0.1% to $16,470.
On the SHFE, copper fell 0.6% to 78,150 yuan per ton, nickel dropped 1.8% to 130,340 yuan, zinc declined 1.6% to 23,585 yuan, tin shed 2.6% to 265,940 yuan, while lead rose 0.5% to 19,905 yuan. Earlier in the session, SHFE nickel touched 129,890 yuan, the lowest since February 21.
"Nickel is under pressure due to weak demand amid ongoing destocking in the battery market and strong supply from Indonesia," Kumari noted. "More supply cuts will be needed to rebalance the market if prices remain in the range of $16,000-$16,500 per ton."
