Aluminum price falls as COVID cases rise in China and the dollar advances

Aluminum prices fell on Tuesday after a spike in COVID-19 cases in China further dampened hopes that the world’s top metals consumer will loosen its tight restrictions.

New coronavirus cases surged in the global manufacturing hub of Guangzhou, data showed on Tuesday, testing the city’s ability to avoid a Shanghai-style lockdown.

At 11:00 GMT, benchmark aluminum on the London Metal Exchange (LME) was down 0.8% at $2,317.50 a tonne, its second day of losses.

A firmer dollar also weighed on the market, making metals priced on the greenback more expensive for holders of other currencies.

Aluminum, copper and other industrial metals rose on Friday on hopes that China would relax its strict COVID-19 restrictions, which could boost their demand.

“It was a phenomenal rally on Friday, but with the reasons behind the rally somewhat softened, it makes sense that we are seeing a pullback.”, said Ole Hansen, of Saxo Bank. “It is a market that is still consolidating. It seems that it wants to go higher, but the trigger for that to happen is not yet strong enough”.

Supply concerns and low inventories helped support copper, which soared 7.1% on Friday, its biggest daily gain since January 2009. LME copper was up 0.3% on Tuesday at $7,935 a day. ton, after previously lowering.

In other base metals, zinc on the LME fell 0.6% to US$2,868 a ton; lead was down 1% at $2,015.50; nickel rose 0.3% to $23,455; and tin was up 2.4% at $19,400.

With information from Reuters