Copper falls almost 2% while aluminum recedes due to the decline in thermal coal prices

Aluminum fell to its lowest level in nearly eight weeks on Wednesday as falling thermal coal prices eased supply concerns, with copper declines as well.

As of 1140 GMT, three-month aluminum on the London Metal Exchange (LME) was down 4.6% at $ 2,697 a tonne, the lowest since Sept. 3.

Copper, meanwhile, was down 1.9% to US $ 9,603 a ton on the LME.

Coal prices fell to their lowest level in more than a month after China’s state planner called on the main input producing provinces to investigate and regulate illegal storage sites and crack down on hoarding.

Aluminum smelting is energy intensive and up to 40% of the metal production costs in China can be attributed to energy.

An energy crisis in the Asian giant has propped up aluminum prices. The price slump seen on Wednesday could be attributed to scrutiny of the coal market, according to Commerzbank analyst Daniel Briesemann.

The global shortage of magnesium, a key ingredient in aluminum alloys, compounds concerns. Analysts warn that this could result in the destruction of demand for lightweight aluminum used in cars and cans.

Aluminum stocks in warehouses monitored by the Shanghai Futures Exchange are at their highest since early July at 269,582 tonnes, which affects prices.