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Aluminium prices firm as China plans hiking coal contract prices

Aluminium prices gained on Friday amid low inventories and China’s plans to raise the benchmark price for long-term coal contracts in 2022.

Three-month aluminium on the London Metal Exchange CMAL3 gained 1.5% to $2,640 a tonne by 0710 GMT, while the most-traded January aluminium contract on the Shanghai Futures Exchange SAFcv1 was up 0.5% at 18,975 yuan ($2,979.46) a tonne.

Traders cited a Bloomberg report that said China’s National Development and Reform Commission drafted a plan to set the benchmark rate for thermal coal at 700 yuan ($109.91) a tonne for long-term contracts, allowing prices to rise or fall within a 150 yuan band around it in monthly adjustments.

“Coal has been a major raw material for electricity, so if power cost has increased that means for major users of electricity their cost will also increase,” said CRU analyst He Tianyu.

LME inventories of the aluminium MALSTX-TOTAL have dropped to 889,575 tonnes, the lowest since September 2007.

Elesewhere, LME nickel CMNI3 rose 0.8% to $20,105 a tonne, zinc CMZN3 was up 1.6% at $3,197.5 and copper CMCU3 was steady at $9,499 a tonne.

Concerns over the supply of industrial metals were also triggered by China’s industry ministry’s five-year plan aimed at the green development of its industrial sectors.

FUNDAMENTALS
* Officials at the World Health Organization on Friday urged Asia-Pacific countries to prepare for a surge in COVID-19 cases fuelled by the Omicron variant.

* China’s embattled property developer Kaisa Group Holdings Ltd 1638.HK said it had failed to secure the minimum 95% approval needed from its offshore bondholders to extend the maturity of a $400 million note that is due next week, raising the risk of a default.

* China’s property downturn is expected to continue into the first half of 2022, with home prices and sales falling as tight credit policies and a looming property tax dampen demand, a Reuters poll showed.

* ShFE nickel SNIcv1 rose 0.6% to 148,890 yuan a tonne, zinc SZNcv1 gained 0.9% to 23,265 yuan a tonne, copper SCFcv1 was up 0.5% at 69,460 yuan a tonne.
Source: Reuters (Reporting by Eileen Soreng in Bengaluru and Mai Nguyen in Hanoi; Editing by Rashmi Aich)

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