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Soaring aluminium hits $3,000 for first time since 2008

Kitco News

(Updates throughout, changes dateline to LONDON)

LONDON, Sept 13 (Reuters) - Aluminium prices rose to $3,000 a tonne for the first time since 2008 on Monday as restrictions on output in China, the biggest producer, fuel fears that supply will run short.

Prices of the lightweight metal used in packaging and construction have leaped 50% this year and 15% in only three weeks as speculators pile into the market.

The benchmark contract on the London Metal Exchange (LME) was up 0.7% at $2,943.50 a tonne at 1045 GMT after touching $3,000.

Factors fuelling the rally include the Chinese output cuts, a rapid increase in the price of alumina, from which aluminium is made, dwindling exchange stockpiles and strong demand, said Gianclaudio Torlizzi at consultants T-Commodity.

"It's very, very hard to be bearish," he said.

The pace of the rally means a correction is likely in the short term, he added, "but the trend is definitely higher".

CHINA: Yunnan province, home to about 10% of China's aluminium capacity, has told smelters using hydropower to keep average monthly output for September-December at August volumes or lower, a government document shows.

Yunnan aluminium smelters had already shut down nearly 1 million tonnes of annual capacity by August, researcher Antaike said this month.

ALUMINA: Futures of the aluminium ingredient on the Comex exchange have surged 20% this month to $365 a tonne.

INVENTORIES: Aluminium inventories in LME-registered warehouses have fallen 33% since March to 1.3 million tonnes and stocks in Shanghai Futures Exchange (ShFE) stores have slumped 42% to 228,529 tonnes since April. AL-STX-SGHMALSTX-TOTAL

POSITIONING: Speculators are betting on higher prices, raising their net long in LME aluminium to 35% of open contracts by Thursday, from 19% a week earlier, brokers Marex Spectron said.

MARKETS: Global equities slipped to 2-1/2 week lows and the dollar strengthened, pressuring metals, which are priced in the U.S. currency.

OTHER METALS: LME copper was down 0.2% at $9,679 a tonne, zinc fell 0.7% to $3,097.50, nickel slid 2.5% to $19,890, lead was 1.9% down at $2,275 and tin fell 0.5% to $33,400.

Reporting by Peter Hobson Additional reporting by Mai Nguyen and Tom Daly Editing by David Goodman

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