Aluminum Bulls Increase Wagers as Funds’ Favorite Is Zinc

Hedge funds and other speculators increased their bullish bets on aluminum with prices climbing to a 17-month high today amid forecasts for a shortage.

The net-long position in aluminum rose to 146,418 futures and options by Aug. 8 from 141,277 contracts a week earlier, the London Metal Exchange said in its second weekly Commitment of Traders report. Zinc has the highest share of money manager bets on higher prices at 28 percent of open interest compared with 25 percent for aluminum and 22 percent for copper.

Aluminum climbed 14 percent this year and Goldman Sachs Group Inc. is forecasting a shortage of 579,000 metric tons. Stockpiles in warehouses monitored by the LME fell 10 percent this year to the lowest since 2012. Premiums buyers in Europe, U.S. and Asia pay to obtain the metal rose to records.

“The high premiums of physical aluminum in the U.S., South Korea and Japan tell you a bullish story,” said Richard Fu, director of Asian commodity trading at Newedge Group SA in London. “On top of the U.S. recovery and good Chinese economic data, low stock levels, tight supply in the market outside of China, geopolitical uncertainties from Ukraine/Russia situation are all positive for aluminum prices.”

Aluminum for delivery in three months rose as much as 1.1 percent to $2,056 a metric ton on the LME, the highest since Feb. 22, 2013. It climbed 0.8 percent by 3:16 p.m. in London.

Trader Report

The LME, home to more than 80 percent of global industrial-metals trading, started publishing the trader data last week after calls from market participants for greater disclosure.

Money managers cut their net-long position in zinc to 85,731 contracts from 96,482 contracts, the figures show in the report on the LME website. Zinc dropped 1.8 percent last week.

The net-long position in copper dropped to 36,622 contracts from 47,957 contracts on Aug. 1, the data show. Prices fell 1.1 percent last week.

Money managers increased their net-long position in nickel to 32,441 contracts from 32,147 contracts and net-long bets on lead rose to 24,666 contracts from 22,038 contracts. Nickel and lead advanced last week.

The LME joined NYSE Liffe and ICE Futures Europe in reporting figures similar to those issued by the U.S. Futures Trading Commission.

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