Aluminum Reaches Three-Week Low on Prospects for Larger Surplus

Aluminum reached a three-week low in London on prospects for a global surplus of the lightweight metal to expand. Copper slumped, narrowing the biggest monthly gain since September.

Supply of aluminum will outpace demand by 994,000 metric tons this year, above the prior 883,000-ton estimate, said Shingi Yamagiwa, manager of light-metals trading at Sumitomo Corp. (8053) Orders to withdraw aluminum from stockpiles tracked by the London Metal Exchange dropped for an eighth week in nine this week, according to daily bourse data.

“The fundamental outlook remains poor,” Stephen Briggs, an analyst at BNP Paribas SA in London, said in a report. “It is hard to see cutbacks being sufficient to significantly erode excess stocks.”

Aluminum for delivery in three months dropped 1 percent to $1,816 a ton by 10:26 a.m. on the LME and reached $1,815, the lowest since Aug. 8. Copper declined 0.2 percent to $7,138 a ton, trimming August’s gain to 3.8 percent, and the metal for delivery in December fell 0.3 percent to $3.2495 a pound on the Comex in New York.

“Copper-market participants could be taking month-end profits after the recent run-up in prices and ahead of the uncertainty from U.S. Fed asset tapering, which is still mostly expected to start in September,” Mark Pervan, an analyst at Australia & New Zealand Banking Group Ltd., said in a report.

The Bloomberg Dollar Index, a gauge against 10 currencies, touched a four-week high. A stronger dollar makes commodities priced in the currency more expensive in terms of other monies.

A copper surplus will widen over the coming year as supply expands, Macquarie Group Ltd. said in a report. LME stocks of the metal gained the most in two months to 588,000 tons this week. Withdrawal orders declined this week for all of the six main metals traded on the LME except tin, while stocks touched a record high for nickel and are the highest since 2011 for tin.

Aluminum may be poised to decline about 13 percent after prices failed to rise above a 200-day moving average, according to technical analysis by Commerzbank AG.

Tin, zinc, nickel and lead declined in London.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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