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Shanghai aluminum jumps over 3% on supply concerns, stimulus hopes

Aluminum prices in Shanghai jumped more than 3% on Friday, as coronavirus-induced restrictions in key producer China fueled supply concerns, while market sentiment was also buoyed by expectations of more economic support.

The most-traded April aluminum contract on the Shanghai Futures Exchange ended daytime trading up 3.3% at 22,810 yuan ($3,590.09) a tonne, gaining 3% for the week.

Three-month aluminum on the London Metal Exchange (LME) rose 1.7% to $3,442 a tonne by 0730 GMT, but was down 1.2% so far in the week.

China has plenty of production capacity and while production may not be affected from the lockdowns, logistics and supply chains may see a greater impact, said DBS Bank analyst Eun-Young Lee.

China has lately been battling its worst COVID-19 outbreak since the virus first emerged in Wuhan in 2020, prompting authorities to impose restrictions on business activities and cargo transport in major cities such as Shenzhen.

However, investors have found solace from China’s pledge to roll out market-friendly policies to support the economy.

Aluminum was also supported by Russian supply chain disruptions, higher energy prices, Chinese emission curbs and Europe’s energy crisis, said ANZ analyst Soni Kumari.

Tokyo and Canberra announced separate measures sanctioning Russian individuals and organizations, including two oligarchs with links to Australia’s mining industry.

Meanwhile, the fourth straight day of talks between Russian and Ukrainian negotiators on Thursday showed no signs of material progress.

Fears Russia’s invasion of Ukraine and mounting sanctions on Moscow would disrupt metal flows and raise the cost of gas have boosted metal prices, with energy-intensive aluminum hitting an all-time high of $4,073.50 on March 7.
Source: Reuters (Reporting by Eileen Soreng in Bengaluru; Editing by Subhranshu Sahu)

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