MANILA, April 18 (Reuters) - London aluminium futures rose
to their strongest level since 2011 on Wednesday as growing
worries over tighter supply following U.S. sanctions on key
producer Rusal sustained a rally that has lifted the metal by 20
percent this month.
Global miner Rio Tinto said adjustments may
be made to its 2018 aluminium output following sanctions on its
Russian partner UC Rusal imposed by the United States
earlier this month.
"The sanction against Rusal and resulting dissociation with
Rusal by its banks, suppliers, customers and related parties
resulted in heightened concern about a global supply shortage,"
said Helen Lau, analyst at Argonaut Securities.
Three-month aluminium on the London Metal Exchange
climbed as high as $2,445 a tonne in early Asian deals, its
strongest since September 2011, before turning flat at $2,405 by
0321 GMT.
There was little impact on base metals prices from China's
surprise move to cut banks' reserve requirement ratio (RRR),
which only lifted steel and coking coal futures
sharply.
"The RRR cut was positive, but it may not have very
significant impact on financial markets. In terms of size, the
steel market is also much bigger than base metals," said CRU
analyst Wan Ling.
China's central bank unexpectedly said it will reduce the
cash banks hold as reserves by 100 basis points from April 25.
But the move falls short of broad monetary easing, with the
authority attaching requirements on how funds must be used.
SHANGHAI ALUMINIUM: On the Shanghai Futures Exchange, the
most-traded June aluminium contract was also nearly
flat at 14,850 yuan ($2,362) a tonne, below a nearly three-month
high reached on Tuesday.
RIO TINTO: Rio last week declared force majeure on some
customer contracts in light of the sanctions on Rusal, the
world's second biggest aluminium producer, and said it is
reviewing Rusal's 20 percent stake in its Queensland Alumina
refinery.
RUSAL HALTS ORDERS: Rusal has stopped placing orders with
two logistics firms that ship its exports, in a sign of
deepening problems for the company.
DIVESTMENT: Rusal may be forced to divest most of its
portfolio of overseas operations if the aluminium giant cannot
restructure them to evade the U.S. sanctions and ensure a flow
of raw materials.
JAPAN TRADERS: Major Japanese trading houses have asked
Rusal to stop shipping refined aluminium and other products and
are scrambling to secure metal elsewhere, industry sources said.
CHINA OUTPUT: Amid the prospect of tighter supply elsewhere,
China's aluminium production rose 4 percent from a year ago to
2.78 million tonnes in March as supply from new smelters
outweighed winter output curbs imposed on existing producers.
CHINA RRR CUT: The People's Bank of China said banks must
use most of the freed-up liquidity to pay back relatively costly
loans obtained via the central bank's medium-term lending
facility (MLF). Based on first-quarter data, the PBOC said the
MLF loans due to be repaid on April 25 will be about 900 billion
yuan ($143 billion).
ALUMINIUM SHEET: The U.S. Commerce Department said it has
made a preliminary determination that aluminium sheet imports
from China are being subsidized.
COPPER: Benchmark LME copper slipped 0.2 percent to
$6,865.50 a tonne. In Shanghai, copper dropped 0.3
percent to 50,710 yuan.
MARKETS: Asian shares edged higher, tracking gains on Wall
Street, although Chinese equities struggled even as Beijing
boosted liquidity in the banking system. The dollar clung to
modest gains.
