(Recasts, adds comment, detail, and updates prices)
London aluminium struck its highest in five years on Wednesday on prospects that China's winter production are starting early and will soon pare back stocks of available metal.
"For aluminium, certainly this (rally) is related to China's winter production cuts," said analyst Helen Lau at broker Argonaut Securities in Hong Kong.
China has launched an aggressive campaign to curb choking smog in its northern regions, mandating a slew of output cuts by the steel and aluminium producers. Aluminium makers must cut capacity by more than 30 percent across 28 cities.
"In order to get that (magnitude of) impact on production cuts you have to start now. We are likely to see prices go higher. But you should not take it as sustainable - right after the winter production cuts are lifted, probably, the production will restart and the price will come off again," she added.
FUNDAMENTAL
- LME ALUMINIUM: London Metal Exchange aluminium CMAL3 traded up 2 percent at $2,167, as of 0706 GMT. It hit its highest since September 2012 at $2,182.50 a tonne, following a gain of 1.9 percent in the previous session.
On the Shanghai Futures Exchange, prices SAFcv1 ended up 3.4 pct.
- CHINA OUTPUT: China's aluminium production last month fell to the lowest since April 2016 at 2.64 million tonnes.
- CHINA LEAD: Shfe lead rallied 3.3 pct to its highest since Dec 2016 as China's supply dwindles. Lead has been particularly hard hit by environmental inspections with 80 percent of illegal secondary smelters shut down since the second half of last year, according to research group Antaike.
- LEAD PREMIUMS: Premiums for LME lead CMPB3 in China's bonded zones jumped $10 to $170-$190 amid tightening domestic supply. Lead imports to China PB-BMPBW-SHMET have been profitable since early August.
- LME COPPER: LME copper CMCU3 climbed 0.3 percent to $6,558. ShFE copper SCFcv1 edged up 0.2 percent to 50,810 yuan. ($7,730)
- INSG: The global nickel market tipped into a wider deficit in July as demand from top stainless steel producer China surged, data from the International Nickel Study Group showed on Wednesday.
- JAPAN ECONOMY: Booming shipments of cars and electronics in August drove up Japan's exports at the fastest pace in nearly four years, further evidence that overseas demand is strong enough to support healthy economic growth.
- COMING UP: Investors awaited the outcome of the Federal Reserve's meeting at which it was expected to announce plans to trim its $4.2 trillion in bond holdings. Fed Chair Janet Yellen plans to hold news briefing at 1830 GMT.
PRICES Three month LME copper CMCU3 Most active ShFE copper SCFcv1 Three month LME aluminium CMAL3 Most active ShFE aluminium SAFcv1 Three month LME zinc CMZN3 Most active ShFE zinc SZNcv1 Three month LME lead CMPB3 Most active ShFE lead SPBcv1 Three month LME nickel CMNI3 Most active ShFE nickel SNIcv1 Three month LME tin CMSN3 Most active ShFE tin SSNcv1
ARBS LMESHFCUc3 LMESHFALc3 LMESHFZNc3 LMESHFPBc3 LMESHFNIc3
($1 = 6.5703 Chinese yuan)
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