December 20, 2018 / 5:21 AM / 8 months ago

METALS-Aluminium hits 16-month low as U.S. withdraws Rusal sanctions

 (Adds Shanghai closing prices, updates London prices)
    BEIJING, Dec 20 (Reuters) - London aluminium prices sank to
a 16-month low on Thursday after the United States said it would
withdraw sanctions on Russian aluminium producer Rusal, while
other metals fell on signs the U.S. Federal Reserve would
continue to hike interest rates.
    Three-month aluminium on the London Metal Exchange
fell by as much as 1.1 percent to $1,905.50 a tonne, the lowest
since Aug. 4, 2017, and stood at $1,915.50 a tonne at 0711 GMT. 
    Prices had hit a near seven-year high when the sanctions
were announced in April on fears of a supply shortage.

    The impact on the Shanghai Futures Exchange was more muted,
with the most-traded February aluminium contract
slipping as much as 0.6 percent before closing flat at 13,690
yuan ($1,984.17) a tonne.    
    John Browning, managing director of Bands Financial in
Shanghai, said he did not expect the lifting of the sanctions to
affect the ShFE aluminium price as much. 
    "The international market and the (Chinese) market have
different dynamics due to a range of conditions from
environmental to production profiles," he said. 
    China is the world's biggest aluminium producer.
    
    FUNDAMENTALS
    * RUSAL: Rusal's Hong Kong shares rose as much as
26.8 percent to their highest since April
    * LME RESPONSE: The LME said it proposed to lift its
suspension on aluminium produced Rusal if U.S. sanctions are
lifted.
    * VOLUMES: The Rusal news saw trade volumes in aluminium up
200 percent on the 20-day moving average, with "decent consumer
demand being matched by speculative selling and residual long
liquidation out of the West," Marex spectron said in a note.   
    * ALUMINIUM: Representatives from China's biggest aluminium
producers will hold a meeting on Friday in the southern region
of Guangxi to discuss slumping demand and falling prices, three
sources familiar with the matter said.
    * FED: The U.S. Federal Reserve on Wednesday pushed its key
overnight lending rate to a range of 2.25 percent to 2.50
percent, the fourth hike of the year, and signalled "some
further gradual" increases.
    * OTHER METALS: All other LME metals were lower, with copper
copper slipping 0.4 percent to $5,994 a tonne. The red
metal had gained 0.8 percent on Wednesday on hopes a pause in
Fed rate hikes would boost demand. ShFE copper fell as
much as 1.3 percent to 47,760 yuan a tonne, the lowest since
Sept. 17, and ended down for a sixth day at 48,220 yuan.
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    MARKETS NEWS    
    * Asian shares slid after the Fed kept most of its guidance
for additional hikes in the next two years, dashing investor
hopes for a more dovish policy outlook.             
  
    PRICES            
 BASE METALS PRICES                       0713 GMT
 Three month LME copper                     5993.5
 Most active ShFE copper                     48220
 Three month LME aluminium                  1915.5
 Most active ShFE aluminium                  13695
 Three month LME zinc                         2530
 Most active ShFE zinc                       20940
 Three month LME lead                       1948.5
 Most active ShFE lead                       18405
 Three month LME nickel                      10895
 Most active ShFE nickel                     90070
 Three month LME tin                         19245
 Most active ShFE tin                       145860
                                                  
 BASE METALS ARBITRAGE                            
 LME/SHFE COPPER             LMESHFCUc3      272.5
 LME/SHFE ALUMINIUM          LMESHFALc3   -1551.47
 LME/SHFE ZINC               LMESHFZNc3     177.97
 LME/SHFE LEAD               LMESHFPBc3     1618.8
 LME/SHFE NICKEL             LMESHFNIc3    1841.53
 


($1 = 6.8996 Chinese yuan renminbi)

    
 (Reporting by Tom Daly; Editing by Rashmi Aich)
  
 
 
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