Aluminium nudges higher on supply concerns, but buyers cautious

By Solomon Cefai

Aluminium ticked higher on Tuesday after struggling to find direction earlier in the session as buyers, rattled by June's price plunge, remained cautious despite support from waning stocks and fears of supply shortages.

Aluminium stabilised over the last week after being battered by expectations of returning supply from the Middle East and the receding Gulf war risk premium. Prices found support from renewed supply concerns and macreconomic conditions.

Benchmark three-month aluminium LME:AH1! on the London Metal Exchange rose 0.24% to $3,123 a metric ton by 0700 GMT, having hit a one-week high of $3,136 earlier in the session. In June, it posted its biggest monthly decline since 2008, falling 16%.

The most-traded aluminium contract on the Shanghai Futures Exchange COMEX:ALI1! added 0.46% to 22,940 yuan ($3,374.47) a ton, in its fourth consecutive gaining session.

Even after its small gains, the market's lack of concerted upwards movement suggests "buyers remain cautious despite signs that downside momentum is fading," analysts at Sucden financial wrote in a note.

Elsewhere, copper prices dipped 0.29% on the LME LME:CA1! and 0.11% on the SHFE COMEX:HG1!. Traders expecting news from the White House on potential tariffs on refined copper last week were left disappointed, with no announcement forthcoming. The market was left in wait-and-see mode.

Tariff considerations have supported copper by pulling material into U.S. warehouses, combined with prospects of demand growth from AI infrastructure, grid upgrades, and electric vehicles.

Data released overnight by the U.S. futures regulator showed that speculators trimmed their bullish position on Comex in the week to June 30.

Other industrial metals also mostly fluctuated, though an exception was SHFE zinc, which increased 1.12%. Zinc is supported by near-term tightness, the Sucden analysts said in a note.

Among other LME metals, zinc COMEX:ZNC1! eased 0.15%, lead MCX:LEAD1! ticked 0.13% higher, nickel MCX:NICKEL1! lost 0.16% and tin MYX:FTIN1! fell 0.12%.

On SHFE, lead MCX:LEAD1! was little changed, nickel MCX:NICKEL1! was flat and tin MYX:FTIN1! added 0.21%.

($1 = 6.7981 Chinese yuan renminbi)