Metals futures market: power rationing in Yunnan Province pushes aluminum prices to high for more than three years, copper prices fall

Tin futures rise above US$35,000 per ton, a record high

Yunnan’s electricity curtailment also drives up zinc prices

Aluminum prices climbed to their highest level in more than three years on Friday, amid concerns that China’s supply will decrease as China’s main production province, Yunnan, implements a new round of power cuts.

At 1600 GMT, the three-month aluminum on the London Metal Exchange (LME) rose 0.1% to US$2,593 per ton, which is expected to rise for the sixth consecutive month.

Aluminum prices narrowed their gains after hitting the highest since April 2018 of US$2,642, after the US dollar index turned down to rise, making US dollar-denominated metals more expensive for buyers using other currencies.

Data showed that US consumer spending increased more than expected, which boosted the dollar.

Aluminum producers in Yunnan Province have received a notice from the local government to restrict electricity consumption. Yunnan Shenhuo, an aluminum smelter owned by China’s Henan Shenhuo Coal and Electricity Co., Ltd., will be unable to achieve its 2021 output target due to power curtailment.

Fu Xiao, head of the Commodity Strategy Department of BOC International, said: “In the near term, the electricity curtailment in Yunnan has lasted longer than expected. We previously thought that normal production would start to resume in August, but now it will take longer.”

China’s aluminum price is hovering near an 11-year high.

Zinc prices are also supported by electricity curtailment, as Yunnan Province is also home to several major zinc smelters. LME zinc rose 0.9% to US$3,025 per ton.

LME copper fell 1% to US$9,725 per ton, nickel futures fell 1.5% to US$19,545, and lead futures rose 0.6% to US$2,378.50 per ton.

Tin futures fell 0.3% to US$34,795 per ton, after hitting a record high of US$35,075.

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