Consumer buying lifts aluminium prices off the lows

With worries regarding oversupply of from Chinese smelters growing graver, aluminium price took a plunge to hit its lowest in six weeks, only to be lifted by consumer buying to a certain extent. Other nonferrous metals were also weighed on by a stronger US dollar.

Volumes of the light metal traded on London Metal Exchange were rather thin owing to the settling of summer slowdown and speculations revolving around prospective interest rate hikes by the US central banks in their upcoming meet.



Three month aluminium on LME closed unchanged at $1,592 a tonne, rebounding from $US1,588, the weakest since June 13.

"The consumption side in aluminium will be underpinned in the second half, but on the other hand the supply of Chinese aluminium has also been picking up," said Xiao Fu, head of commodity market strategy at Bank of China International in London.

"We expect the smelter restarts to be around one quarter of the previously announced shutdowns due to the price recovery. The new capacity coming on line again helps bring sufficient output to meet the demand, so we are neutral towards aluminium."

According to a broker, aluminium dropped to those fresh lows, it was supported as’ industrial users regarded the prices as good value.’

"There has been consumer buying evident from various regions Europe and the Far East," she observed.