Aluminium prices fell to four-month lows on Friday as concerns about demand created by a slowdown in manufacturing activity, particularly in top consumer China, were reinforced by a strong dollar. Benchmark aluminium on the London Metal Exchange traded down 1.6% at $2,868 a tonne in official rings, on course […]
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Aluminium prices fell to four-month lows on Friday as concerns about demand created by a slowdown in manufacturing activity, particularly in top consumer China, were reinforced by a strong dollar.
Benchmark aluminium on the London Metal Exchange traded down 1.6% at $2,868 a tonne in official rings, on course for its sixth consecutive weekly loss.
Prices of the metal used widely in the power, construction and packaging industries earlier touched $2,888.5, a drop of about 30% since early March and the lowest since Jan. 6.
“Concern about growth and demand headwinds from China’s ongoing COVID lockdowns is a primary driver of the selling pressure in base metals,” said AMT analyst Tom Mulqueen.
“Slowing global manufacturing growth, Fed rate hikes and broader inflationary pressure on economic activity also weigh.”
ACTIVITIY: China’s factory activity shrank at the sharpest pace in 26 months in April, while manufacturing activity in the United States and the euro zone slowed.
COVID: China’s trade data due Monday is expected to show export growth slowed in April as strict COVID-19 curbs hit output while imports likely extended declines.
DOLLAR: The higher U.S. currency makes dollar-priced commodities more expensive for holders of other currencies, a major headwind for demand and prices.
US: The Federal Reserve on Wednesday raised its benchmark interest rate by half a percentage point, the biggest jump in 22 years, to combat soaring inflation.
Technicals: Traders say further losses are likely for aluminium if the 21-day moving average, which is trending down, falls below the 100-day moving average.
Strong upside resistance for aluminium comes in at around $2,950 where the 200-day moving average currently sits.
COPPER: Copper stocks in LME registered warehouses at 170,025 have nearly tripled over the past couple of months and are at their highest since last October.
This has weighed on the copper prices, which are hovering near their lowest since December.
It was down 0.7% at $9,424 a tonne.
Source: Reuters (Reporting by Pratima Desai; additional reporting by Brijesh Patel in Bengaluru; Editing by Louise Heavens and David Clarke)