Aluminum Heads for Worst Losing Streak Since 1999 on Supply

By Claudia Carpenter

Nov. 28 (Bloomberg) -- Aluminum headed for its worst losing streak since 1999 in London on speculation increased shipments from China, the world’s largest producer, will exacerbate a global oversupply of the metal.

China may reduce or even cancel taxes on primary aluminum exports, Interfax reported today, citing an unidentified official from the China Nonferrous Metals Industry Association. Aluminum supply will outpace demand by 1.4 million metric tons next year, double this year’s surplus, according to BNP Paribas SA.

“The immediate concern in the aluminum market is that you get some kind of production cuts and a change in export taxes would be counterproductive to that,” said Michael Widmer, a BNP Paribas analyst in London. “If more metal found its way outside China we would have an even bigger oversupply in the global aluminum market.”

Aluminum for delivery in three months declined $16, or 0.9 percent, to $1,775 a metric ton as of 9:24 a.m. on the London Metal Exchange, bringing the drop for November to 13 percent. The metal has declined for five consecutive months, the longest run since the period ending February 1999.

The three-month contract for the metal used in beverage cans and cars will probably average $2,000 a ton next year, down from $2,600 this year, BNP forecasts. Inventories of aluminum in warehouses monitored by the LME jumped 6,975 tons to 1.8 million tons, the most since Dec. 6, 1994.

Copper dropped $51 to $3,645 a ton after inventories gained 2,925 tons to 291,650 tons, the most since Feb. 25, 2004. Copper averaged $2,726 in February 2004.

Copper has tumbled 45 percent this year and aluminum is down 26 percent.

The three-month lead contract dropped $8 to $1,097 a ton and earlier fell to $1,095, the lowest since Aug. 2, 2006. Inventories of the metal used in car batteries rose 400 tons to 41,600 tons.

Zinc declined $6 to $1,214 a ton and nickel fell $150 to $10,100 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net