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Aluminium falls on inventory rise, Rusal uncertainty

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LONDON, May 17 (Reuters) - Aluminium prices slipped on Thursday after inventories increased, showing availability of supplies that could fill a gap if U.S. sanctions on Rusal are not lifted.

On-warrant aluminium stocks in warehouses certified by the London Metal Exchange - inventories that are not earmarked for delivery - surged by 153,075 tonnes or 18 percent on Wednesday, LME data showed on Thursday MALSTX-TOTAL.

"We know there is a lot of material sitting outside of the LME system tied up in these financing deals that I don't think are very profitable any more, so there is potential to bridge any shortfall," said analyst Carsten Menke at Julius Baer in Zurich.

Up to Wednesday, on-warrant aluminium stocks had declined 15 percent since April 6, when the United States imposed sanctions on Russia's Rusal, the biggest aluminium producer outside of China, as people built up supplies for an expected shortfall.

Slightly more than two weeks later, Washington eased the sanctions and held out the possibility of cancelling them. "The big topic is still whether the sanctions will be lifted or not and the market's nervousness is reflected in the fact that it moves so sharply on items like today's (inventory move)."

Benchmark LME aluminium failed to trade in official open outcry activity and was bid down 2.4 percent at $2,260 a tonne, having tilted into negative territory after the LME stocks data was released.

* CHALCO: Aluminum Corp of China Ltd, or Chalco, plans to export 30,000-50,000 tonnes of alumina in May, the company's president said.

* COPPER: Three-month LME copper traded 0.6 percent higher at $6,866 a tonne in official rings.

* CHINA COPPER: China's refined copper output in April jumped 12.3 percent compared to same period last year to 778,000 tonnes, data showed.

* NICKEL: LME nickel climbed 0.8 percent to $14,585 a tonne in official trading. It is the best performing LME metal this year with gains of about 15 percent, but Commerzbank was cautious about further gains due to an extended net long speculative position.

"A price correction would thus come as no surprise, especially as the Beijing-based metals analytical firm Antaike envisages demand growth of only 3.5 percent in China this year," the German bank said in a note.

* BULL CYCLE: Metals markets are moving into a new bull cycle that will be longer and shallower than the last, driven by rising inflation and dispersed demand growth, panelists said at the LME week Asia conference in Hong Kong.

* PRICES: Zinc was bid down 0.4 percent to $3,062 a tonne in official rings; lead edged down 0.04 percent to trade at $2,340; and tin traded down 0.8 percent at $20,555.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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