China's Yunnan province has asked aluminium producers to
reduce power consumption by 40-42% from September levels in the
face of an ongoing supply crunch.
"Aluminium prices have been supported by the prospect of
capacity curtailment in China due to power availability. This
could see output cuts as seasonal demand starts to pick up in
March," said Sucden Financial analyst Geordie Wilkes.
Analysts estimate output cuts at smelters in China since the
middle of last year will cut supplies in the top consumer to
less than 40 million tonnes by the end of February.
Aluminium stocks in LME-registered warehouses
have nearly doubled to 581,300 tonnes since Feb. 6. In
warehouses monitored by the Shanghai Futures Exchange, aluminium
inventories have jumped 360% since late December to
249,598 tonnes.
On the technical front, support for aluminium comes from the
200-day moving average around $2,245. Resistance is at $2,480,
the 50-day moving average.
Meanwhile, copper was up 0.3% at $9,172.50 a tonne after
touching its highest since Feb. 2 at $9,211.50.
Copper has been under pressure from a stronger U.S.
currency, which makes dollar-denominated commodities more
expensive for holders of other currencies.
"Copper is dominated by moves in the dollar and the Fed,"
Wilkes said, adding that a discount for the cash contract over
three-month copper suggested weak demand.
Strong U.S. labour data and signs of persistent inflation
have raised the chances of the U.S. Federal Reserve raising
interest rates further than many previously expected.
In other metals, zinc fell 0.5% to $3,110.50 a
tonne, lead slipped 0.5% to $2,144, tin was up
3.1% at $27,530 and nickel gained 0.6% to $27,095.
(Reporting by Pratima Desai; Additional reporting by Peter
Hobson; Editing by David Goodman and Alexander Smith)
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