Aluminium Prices Rise on LME While SHFE Drops Amid China Export Tax Changes

Aluminium prices on the London Metal Exchange (LME) rose on Tuesday, while prices on the Shanghai Futures Exchange (SHFE) declined. The market is reacting to China's recent announcement to remove a 13% export tax refund for certain aluminium products starting December 1.

Three-month aluminium on the LME was up 0.6% at $2,623 per metric ton by 1156 GMT, while the most-traded SHFE December aluminium contract closed down 0.4% at 20,470 yuan ($2,827.50) per ton.

China's decision to cancel export rebates has raised concerns about a potential tightening of global aluminium supplies, with more products remaining in the domestic market. "In the near term, the cancellation of rebates will make Chinese aluminium more expensive on the international market and could lead to a reduction in export volumes," said Ewa Manthey, a commodities analyst at ING.

A trader indicated that LME aluminium might struggle to maintain its recent price rally, which saw prices hit $2,730 last Friday, until physical demand picks up. However, the market is still supported by escalating tensions between Russia, a major producer, and Ukraine, along with the West.

Other base metals experienced mixed results. LME copper fell 0.4% to $9,037.50 per ton, impacted by a stronger U.S. dollar, which made dollar-priced metals more expensive for buyers using other currencies. Lead dropped 0.7% to $1,977.50, affected by significant inflows of the metal into LME-registered warehouses in Singapore, which increased total stocks to their highest level since March 2013.

Meanwhile, zinc fell 0.1% to $2,948.50, tin firmed 0.7% to $29,185, and nickel rose 1.1% to $15,890.