London aluminium jumped on Tuesday to a more than 10-year high and was on track for its seventh straight monthly gain as output curbs in top producer China stoked concerns over tight supply.
Aluminium prices have been supported by production curbs in Chinese smelting regions often aimed at easing the strain on the power grid.
The government in southern China’s Guangxi region, an aluminium and alumina production hub, called on Monday for tougher controls on energy consumption, according to a statement, sparking fears of more output cuts.
Three-month aluminium on the London Metal Exchange advanced as much as 2.9 percent to $2,726.50 a tonne, its highest since May 2011, before easing to $2,693 a tonne, still up 1.6 percent in early trading.
The most-traded October aluminium contract on the Shanghai Futures Exchange closed up 1.2% at 21,390 yuan ($3,311.09) a tonne, hovering near its highest since August 2008 of 21,550 yuan a tonne hit in the previous session.
“The impact of power and production restrictions in Yunnan is still expanding,” Huatai Futures said in a report, adding the addition of other production areas to the list was not ruled out.
Yunnan is an aluminium hub and has seen some smelters forced to cut production due to power curbs this year.
The China Nonferrous Metals Industry Association held a meeting of top aluminium smelters on Monday to address what it described as an “irrational surge” in aluminium prices.
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