Aluminum Falls From Record After Surge on China Supply Concern

By Li Xiaowei

July 8 (Bloomberg) -- Aluminum declined from a record in Asian trade after it jumped yesterday on reduced output from China, the world's largest producer, because of power shortages.

The metal, used in construction and cars, advanced as much as 5.3 percent to a record of $3,327 a metric ton in London yesterday as Aluminum Corp. of China Ltd. halted output at a venture in Shanxi province because of an electricity shortfall.

``Investors are becoming increasingly bullish on aluminum because of expected power issues around the world,'' Yang Bo, a trader at Minmetals Starfutures Co., said today by phone from Shenzhen. Still, ``Shanghai prices are quite reluctant to chase the London gains due to lackluster demand, and this may curb further gains in London.''


Aluminum for delivery in three months on the London Metal Exchange declined as much as 0.5 percent to $3,290 a metric ton and traded at $3,290.75 at 9:13 a.m. in Shanghai.

The contract has rallied 37 percent this year after power shortages in China and South Africa curbed output. Power accounts for between 30 and 40 percent of operating costs for aluminum smelters.

September-delivery aluminum on the Shanghai Futures Exchange rose as much as 1.1 percent to 19,920 yuan ($2,903) a ton, and traded at 19,845 yuan. The metal has gained 11 percent since the start of the year.

The government in northern Shanxi ordered smelters to pare capacity to ensure power supply for farming, Wang Suomin, a manager at the Shanxi Huaze Aluminum & Power Co., said yesterday. The venture has an annual capacity of 280,000 metric tons.

Among other LME-traded metals, copper rose 0.6 percent to $8,460.25 a ton, zinc fell 0.5 percent to $1,825 and lead was down 0.6 percent at $1,620. Nickel and tin were untraded in Asia after settling at $20,925 and $22,750 yesterday.

To contact the reporter for this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net