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Shanghai aluminium falls over 7% as coal prices drop

Shanghai aluminium prices fell on Friday to their lowest in over a month as tumbling Chinese coal prices eased concerns of disruptions to metal supplies and forced selling in some commodities.

The most-traded November aluminium contract on the Shanghai Futures Exchange SAFcv1 shed as much as 7.6% to 21,500 yuan ($3,361.27) a tonne, its lowest since Sept. 6.

Three-month aluminium on the London Metal Exchange CMAL3 fell 1.1% to $2,879 a tonne by 0544 GMT, after dropping as much as 5.5% in the previous session.

China’s thermal coal futures sank about 13%, extending losses since Tuesday when they toppled off record highs, as Beijing signalled it would intervene to cool surging prices to help electricity producers out of a widespread power crunch. L1N2RI03W

Aluminium has been touted as the base metal most impacted by a widespread power curb in China, the world’s biggest producer of the metal, due to its energy intensive smelting process.

Meanwhile, rising aluminium inventories in China also pressured prices, with ShFE stocks AL-STX-SGH up for four straight weeks and social stocks in China SMM-ALU-CON at their highest since May 27 of 957,000 tonnes.

“Collapsing coal prices in China sent shockwaves across metal markets, leading to some speculative liquidation,” said ING analysts in a note.

“While speculative activity fuelled by the power crunch may cool down for a bit now, there are little signs of easing restrictions for Chinese metals output,” it added.

* LME copper CMCU3 rose 0.4% to $9,869.50 a tonne, nickel CMNI3 edged up 0.1% to $19,945 a tonne, and lead CMPB3 rose 0.7% to $2,416 a tonne.

* ShFE copper SCFcv1 fell 2.5% to 72,340 yuan a tonne, nickel SNIcv1 dropped 4% to 150,400 yuan a tonne, zinc SZNcv1 shed 4.3% to 24,720 yuan a tonne and tin SSNcv1 lost 3.6% to 280,620 yuan a tonne.
Source: Reuters (Reporting by Mai Nguyen in Hanoi; Editing by Krishna Chandra Eluri)

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