(Adds comments on Yunnan, updates prices)
By Eric Onstad
LONDON, Feb 20 (Reuters) - Aluminium prices were driven
higher on Monday by supply concerns after reports that smelters
in top producer China were curbing production.
Three-month aluminium on the London Metal Exchange
(LME) advanced 3.1% to $2,461 a tonne by 1700 GMT after slipping
by 0.3% on Friday.
Aluminium output in one of China's major producing
provinces, Yunnan, is set to decline after cutbacks were
ordered, analysts said.
"It looks like the market is finding some support from the
pick up in aluminium prices with production being curbed further
in Yunnan province," Ole Hansen, head of commodity strategy at
Saxo Bank in Copenhagen, said.
"There are still plenty of supply concerns underpinning
metals prices."
The southwestern province of Yunnan has required
electrolytic aluminium producers to further reduce their power
usage because of ongoing power supply constraints, state-owned
Shanghai Securities News said on Monday.
The power rationing, which amounts to about 1 million
kilowatts, will cut annual production capacity by about 740,000
tonnes of electrolytic aluminium, the Shanghai Securities News
cited the industrial information provider Mysteel as saying.
"Whilst we expect supply to decline further near-term, we do
not expect curtailments to be as severe as in 2021," UBS analyst
Daniel Major said in a note.
China's aluminium output last year rose 4.5% from the
previous year to a record high, boosted by new capacity and a
relaxation of power supply restrictions.
A weaker dollar also supported metals prices, making
commodities priced in the U.S. currency less expensive for
buyers using other currencies.
LME aluminium prices have been weak recently, sliding by
about 8% since Jan. 26 after large gains in inventories. LME
aluminium stocks have jumped by 56% over the last month. All LME prices were stronger on Monday as additional impetus
was provided by a survey showing that home sales in 16 Chinese
cities rose for a third consecutive week, with more support
measures and the end of Beijing's zero-COVID policy helping to
stabilise demand.
LME copper advanced 1.8% to $9,147 a tonne, its
highest in more than two weeks, while zinc rose 2.5% to
$3,133.
Lead surged 4.8% to $2,163, the biggest one-day gain
in nearly four months, nickel jumped 4.6% to $26,985 and
tin climbed 3.2% to $26,690.
For the top stories in metals and other news, click ($1 = 6.8591 yuan)
(Reporting by Eric Onstad; Additional reporting by Mai Nguyen
in Hanoi; Editing by David Goodman, Shounak Dasgupta and Barbara
Lewis)
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