News: METALS-Aluminium hits highest since May 2015 on China smelter worries

• Protest in north China over building of aluminium plant
• Data indicates Chinese credit growth remains strong
• Escondida, Freeport supply woes dominate copper

(Updates with official prices)

Aluminium touched its highest in 21 months on Tuesday on renewed concerns about potential closures of Chinese smelters to cut pollution while copper also extended gains on supply worries.

Base metals also got fillip from a rise in Chinese credit growth and hopes for more infrastructure spending.

Benchmark aluminium CMAL3 on the London Metal Exchange climbed 1.6 percent to $1,901 a tonne in official open outcry trading, the highest since May 13, 2015.

In a sign of growing public anger about pollution, hundreds of residents in a northeastern Chinese city on Tuesday protested against the building of an aluminium processing plant.

That came a day after Reuters reported a draft policy document showed that the world's biggest metals consumer was considering forcing steel and aluminium producers to cut more output as Beijing intensifies its war on smog.

"It doesn't appear as though production cuts have been implemented, although if the proposed measures are applied this should impact a significant proportion of current China steel and aluminium output," Alastair Munro at broker Marex Spectron said in a note.

"Buying across industrial metals ... we believe (was) driven by the size of the fixed asset investment plan with recent comments in the press suggesting investment in railway construction will remain high in 2017."

While the latest fixed investment data is due later this month, figures showed on Tuesday that China's banks extended the second highest monthly loans on record in January, indicating credit growth remained robust.

Copper also built on hefty overnight gains as a strike continued in Chile and an export ban remained in place in Indonesia.

Three-month LME copper CMCU3 traded 0.8 percent higher to $6,155 in official rings, after hitting its highest since May 2015 on Monday at $6,204.

Freeport-McMoRan Inc has halted production of concentrate at Grasberg in Indonesia, the world's second-largest copper mine, in a long-running dispute over investment guarantees.

Meanwhile, a strike that has shut down operations at northern Chilean copper mine Escondida, the world's biggest, was due to enter its sixth day on Tuesday.

"It doesn't appear that in Chile there will be any quick resolution to the strike. There's quite a wide gap between what workers are wanting and what BHP is offering," Warren Patterson, commodities strategist at ING in Amsterdam, said.

He did not recommend, however, buying copper at this point. "You've got the funds in there which are pretty long. That does pose quite a lot of downside risk if there's an unexpected catalyst."

Elsewhere, lead CMPB3 dipped 0.04 percent to $2,419 in official activity while other metals failed to trade in rings.

Zinc CMZN3 was bid up 0.6 percent at $2,933, nickel CMNI3 was bid 1.1 percent higher at $10,850 and tin CMSN3 was bid down 0.9 percent at $19,825.

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		  
($1 = 6.8723 Chinese yuan renminbi)