Aluminum Reaches Three-Week Low on Prospects for Larger Surplus

Aluminum reached a three-week low in London on prospects for an expanding global surplus. Nickel declined the most in more than a week after inventories climbed to a record.

Supplies of aluminum will outpace demand by 994,000 metric tons in 2014, expanding from 883,000 tons estimated for this year, said Shingi Yamagiwa, manager of light-metals trading at Sumitomo Corp., Japan’s fourth-largest trading house. Orders to withdraw aluminum from stockpiles tracked by the London Metal Exchange have dropped for the eighth week in nine.

“The markets are very well-supplied with metal right now, and for as long as we see that, prices are going to continue to struggle,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a telephone interview. “We’re going to need better economic numbers to tighten up aluminum prices.”

Aluminum for delivery in three months tumbled 1.2 percent to settle at $1,813.50 a ton at 5:50 p.m. local time on the LME, after falling to $1,806.75, the lowest since Aug. 8.

A stronger dollar, which reduces the appeal of commodities as alternative assets, also eroded support for metals. The Bloomberg Dollar Index, a gauge against 10 currencies, touched a six-week high.

Nickel retreated 2 percent to $13,800 a ton in London. Inventories tracked by the LME climbed to a record 212,328 tons on Aug. 28.

Copper lost 0.7 percent to $7,100 a ton ($3.22 a pound). In New York, the futures for delivery in December slumped 0.8 percent to close at $3.233 a pound on the Comex.

A copper surplus will widen over the coming year as supply expands, Macquarie Group Ltd. said in a report. Stockpiles monitored by the LME climbed 4.2 percent this week to 588,000 tons, the biggest gain in two months. Withdrawal orders fell this week for all of the six main metals traded on the LME except tin.

Prices for tin, zinc and lead also slumped in London.

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