Aluminum Drops to Four-Year Low on Signs Supply to Remain Ample

Aluminum touched a four-year low in London amid indications the lightweight metal will remain in ample supply even as producers shut capacity.

Global output will rise 6.2 percent this year, exceeding demand by about 500,000 metric tons, according to Societe Generale SA. Some 1.2 million tons of capacity will be closed this year, adding to 1.1 million tons shut in 2011 and 2012, the bank said in a report Nov. 26.

“No one really wants to take those cuts seriously,” David Wilson, an analyst at Citigroup Inc. in London, said by telephone. “If you’re just removing higher-cost production, that suggests the LME price may still drift lower. Everybody’s still overproducing, they are just doing it at a cheaper rate.”

Aluminum for delivery in three months settled 0.2 percent lower at $1,754 a ton, the lowest since July 2009, on the London Metal Exchange today. Copper closed unchanged at $7,020 a ton. The metal for delivery in March gained 0.2 percent to $3.197 a pound in electronic trading on the Comex in New York, where the floor is shut today for the Thanksgiving holiday.

About 25 percent of aluminum capacity outside China is cash-negative at current prices and producers have cut high-cost output, Societe Generale said. Stockpiles tracked by the LME were little changed at 5.40 million tons, daily data showed.

Copper inventories declined for a 19th session to 429,200 tons. Stockpiles of tin rose 20 tons to 10,815 tons after reaching the lowest level since March 2012 yesterday.

Tin for delivery in three months fell 0.2 percent to $22,525 a ton. Prices touched $22,400, the lowest since Sept. 13, on signs of revived supply from leading exporter Indonesia.

Trading of tin on the Indonesian Commodity and Derivatives Exchange, where metal must change hands before being exported, jumped 85 percent this month from October as of Nov. 26, according to bourse data. Shipments of ingots and other tin products surged more than fivefold last month after plunging 88 percent in September, government data show.

“The lack of metal flow out of Indonesia seems to be easing,” Citigroup’s Wilson said. “Actual shipments have been rising as more metal is traded through their exchange.”

Zinc and lead fell in London. Nickel advanced.

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