Saturday, June 6, 2009

Aluminum Heads for Biggest Weekly Gain in 21 Years in London

Aluminum rose in London, heading for the biggest weekly gain in 21 years, as inventory figures signaled a possible strengthening in demand.

Aluminum earmarked for shipment from warehouses registered with the London Metal Exchange jumped almost 15 percent to 81,375 metric tons. That was the highest since April 17 and accounted for about 1.9 percent of total inventories.

“Some distributors are showing renewed buying interest on concern that they will not be prepared to meet orders when demand returns,” Deutsche Bank AG analysts Michael Lewis and Joel Crane said today in an e-mailed report.

Aluminum for three-month delivery added $7.25, or 0.5 percent, to $1,571.75 a ton at 5:05 p.m. on the LME. The contract has added 9.1 percent this week, closing in on the largest gain since June 1988, after sliding for three weeks.

Industries from packaging to aerospace use aluminum, which has risen 2 percent this year in London, the least among the LME’s six main metals. Copper has soared 63 percent and lead is up 66 percent.

Aluminum futures open interest, or the number of contracts outstanding, rose to a record 829,336 lots as of yesterday. The increase suggested investors were making purchases, which may represent new bets on higher prices, Deutsche Bank’s Lewis and Crane said.

Still, LME-monitored aluminum stockpiles have almost quadrupled in a year. Supply will exceed demand by 380,000 tons this year, less than last year’s 1.29 million-ton surplus, according to the analysts.

‘Significant Improvement’

United Co. Rusal, the world’s largest producer, said June 3 it expects a “significant improvement” in prices from the third quarter as the global economy rebounds.

Copper for three-month delivery dropped $32, or 0.6 percent, to $4,993 a ton on the LME, after earlier advancing as much as 2 percent. Copper for July delivery fell 0.9 percent to $2.2805 a pound on the New York Mercantile Exchange’s Comex division.

U.S. employers cut 345,000 workers from payrolls in May, the smallest drop in eight months, the Labor Department said today in Washington. Other figures released this week showed that fewer Americans filed claims for jobless benefits and sales of previously owned homes advanced.

Copper stockpiles monitored by the LME dropped 3,225 tons to 299,975 tons. Inventories tracked by the Shanghai Futures Exchange have jumped 15,263 tons, or almost 51 percent, to 45,480 tons this week. Including Comex stockpiles, inventories totaled 396,999 tons, up 1 percent for the week.

Economic Rebound

Optimism about an economic rebound has helped to drive copper and other metals higher this year. Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich, said today by phone he has yet to see any signs of improved demand and Western economies remain in recession.

“As demand continues to be weak, metals can’t rally indefinitely,” he said.

Among other LME metals for three-month delivery, nickel fell 0.9 percent to $14,575 a ton, and lead lost 0.2 percent to $1,663 a ton. Zinc gained 0.6 percent to $1,565.25 a ton, and tin was unchanged at $14,700 a ton.

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