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Aluminium nears highest in two years on China optimism
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Bolstering sentiment for base metals is an expectation that activity in China's manufacturing sector likely grew for an eighth straight month in March. Lisi Niesner
Aluminium hit its highest level in nearly two years, supported by optimism that China would carry out plans to cut supply and by a rebound in the oil price.

Three-month aluminium on the London Metal Exchange (LME) climbed 0.8 per cent to close at $US1960 a tonne, its strongest since May 2015.

"As long as China follows through with this and takes its environmental concerns seriously, there is potential for aluminium to perform quite well," Nitesh Shah, a commodities analyst at ETF Securities, said.

China said it would require aluminium smelters to cut capacity by 30 per cent over the winter heating months as part of its anti-pollution measures.

Separately Japan's aluminium premium for shipments during the April to June quarter has been set at $US128 per tonne, up about a third from the quarter before due to higher overseas prices, five sources directly involved in the pricing talks said.

Bolstering sentiment for base metals is an expectation that activity in China's manufacturing sector likely grew for an eighth straight month in March as a surprise rebound in the property market added to a construction boom, boosting sales of building materials from steel to cement, a Reuters poll showed.

The official PMI number is to be released on March 31, along with the official services PMI. The private Caixin/Markit PMI survey, which focuses more on small and mid-sized firms, will be published on April 1.

The official PMI is expected to stay at 51.6 in March, the same as in February which was the second-highest reading since July 2014, according to a median forecast of 31 economists in a Reuters poll.

While that is well above the 50.0 mark which separates expansion from contraction, over a dozen cities have announced fresh property cooling measures in recent weeks to slow home price rises, raising questions over how long the solid pace of growth can be sustained.

Home sales rebounded in the first two months of the year with an increase in new starts, defying previous government curbs to contain bubbly prices in big cities such as Beijing.

"Many projects started in March as it is usually the peak season," said Shen Jianguang, analyst at Mizuho Securities in Hong Kong.

Profits of Chinese industrial firms surged almost 32 per cent in the first two months of 2017 - the fastest pace in nearly 6 years - as prices of commodities from coal to iron ore raced higher.

Some China watchers think the wave of property tightening measures announced since late last year will eventually slow home sales and prices.

"The market will certainly freeze under the new measures. Sales may drop 90 per cent," said Yi Xianrong, a former researcher at the Chinese Academy of Social Sciences - a state think tank - and now a professor at Qingdao university.

China's top copper smelters have agreed to an 11 per cent cut in second-quarter treatment and refining fees, after disruptions at the world's two biggest copper mines curbed the global supply of raw material.

Copper ended up 0.6 per cent to $US5907 per tonne. Zinc was at a one-week high, up 1.2 per cent to $US2858, lead gained 0.9 per cent to $US2350 and tin added 0.7 per cent to $US20,175.