Aluminum touches one-year high

July 9, 2014 06:51 AM

Aluminum reached a one-year high in London after Alcoa Inc. said a shortage of the metal will be larger than previously forecast. Zinc traded near a 35-month high as inventories continued to shrink.

The aluminum market’s supply-demand deficit will come to 930,000 metric tons this year, more than April’s 730,000-ton estimate, Alcoa, the biggest U.S. producer, said yesterday. Inventories monitored by the London Metal Exchange are at the lowest since September 2012 and zinc stocks dropped today for a 12th session in 13, bourse data showed.

“In aluminum and zinc, there has been a lack of investment in new capacity following 7-8 years of surplus, resulting in a lack of ex-China supply growth,” Goldman Sachs Group Inc. analysts Max Layton and Jeffrey Currie wrote in a report dated yesterday. The bank has been bullish on aluminum, nickel and zinc since the start of the year, it showed.

Aluminum for delivery in three months rose 0.4 percent to $1,948 a ton by 12:57 p.m. on the LME after touching $1,952, the highest level since June 2013. Zinc gained 0.8 percent to $2,301 a ton after reaching $2,318.50 yesterday, the highest level since August 2011.

Prices also climbed amid signs the economy is stabilizing in China, the world’s biggest consumer of industrial metals. Producer prices declined 1.1 percent from a year earlier in June, the nation’s statistics bureau said, slowing from 1.4 percent in May. The easing of factory deflation follows data showing manufacturing expanded at a faster pace last month.

Chinese trade figures for June due tomorrow will show stronger growth in exports and a recovery in imports, according to analysts surveyed by Bloomberg.

LME zinc stockpiles fell 29 percent this year to 662,525 tons, the lowest since December 2010, according to the data. Aluminum inventories declined 8 percent to 5.02 million tons.

Copper for delivery in three months rose 0.5 percent to $7,165 a ton on the LME and futures for delivery in September added 0.4 percent to $3.2705 a pound on the Comex in New York. Tin and nickel fell in London, while lead was little changed.

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