Aluminum rises on stable China inflation data

Aluminum neared an 18-month high on Monday aided by relatively low inflation data in China.

The metal closed at US$2,032/t in London, up US$14.50 from the previous day and its highest since February 2013 after official figures showed China's annual inflation rate was 2.3% in July. "This gives the government and central bank scope to undertake even more substantial economic stimulus measures and thus to achieve this year's 7.5% economic growth target," Commerzbank said in a note.

China is the world's biggest aluminum consumer, accounting for 23.2Mt of 50.2Mt used globally in 2013, according to the European Aluminium Association.

But higher Chinese aluminum exports could hit prices, Commerzbank said, after the country shipped 380,000t unwrought aluminum and products of the metal in July, up 23% on the same month last year.

"If China also steps up its aluminum exports in the coming months, the supply on the global aluminum market (outside China) will no doubt increase further, which is likely to weigh on the price," the bank said.

Concerns have also been raised that higher prices will lead to increased aluminum output, prompting future price falls.

Lead and zinc prices rose US$11 and US$4.50 to US$2,248/t and US$2,309/t, respectively, on Monday with tin up US$20 to US$22,320/t and nickel down US$125 to US$18,495/t. Copper closed at US$3.180/lb, down from Friday's US$3.184/lb with molybdenum flat at US$29,000/t.