September 27, 2019 / 11:10 AM / 24 days ago

METALS-Aluminium slides to lowest since January 2017

(Updates with official prices, adds premiums)

By Peter Hobson

LONDON, Sept 27 (Reuters) - Aluminium prices were set for their biggest weekly decline since last October as falling alumina prices and a weak demand outlook dragged the metal used in transport and packaging to its lowest level since January 2017.

Benchmark aluminium traded 0.2% lower at $1,733 a tonne in official rings after touching $1,723.50. It was 3.4% down over the week.

Weaker demand because of slowing industrial activity could push prices slightly lower, said Bank of China International analyst Xiao Fu.

She said winter production curbs in China, the largest producer, are likely to be more moderate than last year and provide less support for prices.

CHINA FACTORIES: Profits at China’s industrial companies contracted in August, reversing the previous month’s brief gain, as weak domestic demand and trade tensions weighed on corporate balance sheets.

The data followed a Reuters poll showing that China’s factory activity is likely to contract for a fifth straight month in September.

TRADE WAR: Trade talks between the United States and China are set to resume in Washington on Oct. 10, CNBC reported on Thursday. The trade dispute has dragged on for 15 months and damaged economic growth and metals prices.

MARKETS/DOLLAR: World equities markets dipped and the dollar was near its strongest since 2017, pressuring metals by making them more expensive for buyers with other currencies.

ALUMINA: Prices of the main raw material for aluminium have more than halved from last year’s peaks and - at $294 a tonne - are at their lowest since June 2017, dragging down aluminium prices.

PREMIUMS: Premiums for aluminium shipments to Japan for October to December were set at $97 a tonne, down 10% from the previous quarter, amid ample supplies in Asia and softening demand, sources told Reuters.

ZINC: LME zinc traded 0.1% down at $2,297 a tonne and was largely unchanged over the week, even the premium for cash zinc over the three-month contract surged to $33.25 from $3 on Sept. 19, pointing to a decline in immediately available metal. MZN0-3

On-warrant zinc inventories in LME-registered warehouses touched a record low of 35,450 tonnes this month before rising to 47,525 tonnes. MZNSTX-TOTAL

Bank of China International’s Fu said supply tightness should ease with an expected increased in refinery output, pressuring prices that fell this month to their lowest since 2016.

OTHER METALS: Benchmark copper did not trade but was bid up 0.3% to $5,741 a tonne, nickel traded 0.7% higher at $17,325, lead was bid 0.9% lower to $2,075 and tin was bid down 0.3% at $16,275. (Reporting by Peter Hobson; Additional reporting by Naveen Thukral in Singapore and Tom Daly in Beijing; Editing by Emelia Sithole-Matarise and David Goodman)

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