Metals futures market: supply concerns push aluminum and zinc prices to rise, copper prices also rise
Aluminum and zinc prices climbed on Tuesday, and concerns about supply disruptions caused by long-term high electricity prices spurred buying. Industrial metals were generally boosted by a weaker U.S. dollar.
1624 GMT, the London Metal Exchange (LME) index futures aluminum rose 1% to 2,836 US dollars per ton, a rise of more than 40% in 2021. Zinc futures rose 1.6% to US$3,590 per ton and rose 28% in 2021.
“The power theme and (aluminum and zinc) shortages will be with us for some time,” said a metal industry source. “Inventories are already low, and more metals will leave (LME registered) warehouses.”
Traders said that the Omicron variant is not the main focus, as the risk to global growth does not seem to be large.
European natural gas prices surged by more than 30% on Tuesday, and the supply from Russia was low. As the temperature is getting lower and lower, this rekindled concerns about energy shortages.
Before Indonesia banned coal exports in January, high electricity prices and power outages had become a problem for China. Indonesia is China’s largest supplier of electricity and coal.
The U.S. dollar index reversed its early gains after data showed that US manufacturing activity slowed in December.
The lower U.S. dollar makes U.S. dollar-denominated metals cheaper for holders of other currencies, which may boost demand.
Aluminum inventory MALSTX-TOTAL has decreased by more than 60% since mid-March, and zinc inventory MZNSTX-TOTAL has decreased by more than 30% since April.
Copper futures rose 0.1% to US$9,733 per ton, lead futures fell 0.2% to US$2,299 per ton, tin futures rose 0.9% to US$39,195 per ton, and nickel futures rose 1.6% to US$21,080 per ton.