Aluminum Rises From One-Month Low in Asia After Crude Oil Gains

By Li Xiaowei

July 21 (Bloomberg) -- Aluminum rose from a one-month low in Asia after crude oil rebounded, renewing concerns of higher production costs for the energy-intensive metal.

Energy accounts for around 40 percent of aluminum's production costs. Crude oil gained from a six-week low in New York on speculation diplomatic tensions with Iran may escalate after the world's fourth-largest oil producer resisted United Nations demands that it suspend nuclear research.

Aluminum ``is moving in line with crude oil,'' Zeng Chao, an analyst at Everbright Futures Co., said in an e-mailed report today. Still, signs of ample supplies may offset expectations of higher costs, Zeng said.

Aluminum for delivery in three months on the London Metal Exchange rose as much as 0.6 percent to $3,049.75 a metric ton and traded at $3,046 at 10:31 a.m. in Shanghai. The metal dropped to $3,020 on July 18, the lowest in a month, after crude oil fell and inventories increased.

October-delivery aluminum on the Shanghai Futures Exchange declined 0.7 percent to 19,130 yuan ($2,803) a ton.

Aluminum stockpiles monitored by the London exchange jumped to the highest since May 2004 on July 18. China, the world's largest producer, made 1.15 million tons of the metal in June.

Among other LME-traded metals, copper rose 0.4 percent $8,115 a ton, zinc was up 0.8 percent at $1,834, lead, nickel and tin were untraded in Asia after settling at $1,970, $20,400 and $23,425 on July 18.

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