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Market News

METALS-Shortages help aluminium towards 13-year highs

(Updates prices)

LONDON, Oct 4 (Reuters) - Aluminium prices climbed towards 13-year highs on Monday, boosted by strong demand and large shortages created by China imposing production curbs on high-polluting industries such as smelting to cut power use and emissions.

Benchmark aluminium on the London Metal Exchange (LME) traded 2.1% up at $2,917 a tonne by 1558 GMT. Prices of the metal used in the transport and packaging industries last month hit $3,000 a tonne for its highest since July 2008.

A widespread power shortage in China has raised concerns over slower growth and demand as the government has focused on limiting use by energy-intensive industries to lessen the impact on households.

Aluminium smelters can account for up to 7% of China’s overall energy consumption, analysts say, and up to 40% of the metal’s production costs in China could be accounted for by power.

“The aluminium story isn’t over yet by any means,” one fund manager said. “Consumption may be slowing in China, but the rest of the world is still in deficit.”

DATA: China’s import and export data later this week will be closely watched for clues to growth and demand for base metals.

“Headwinds to China’s demand have been pronounced year-to-date over car production, construction activity and more recently tight power markets,” said BoA Securities analyst Michael Widmer.

“The fundamental backdrop may remain subdued until auto, property and power issues normalise, although this may not happen until 2022.”

INVENTORIES: Supported by low stocks, copper prices were up 1.7% at $9,283 a tonne.

In warehouses monitored by the Shanghai Futures Exchange, stocks CU-STX-SGH are at their lowest since June 2009 at 43,525 tonnes, while inventories in LME-registered warehouses MCUSTX-TOTAL have fallen more than 10% over the past month to 216,725 tonnes.

Falling stocks and large holdings of copper warrants have reinforced worries about supplies on the LME market.

This has created a premium for cash copper over the three-month contract MCU0-3. The premium was at $7 a tonne on Friday.

OTHER METALS: Base metals overall found support from a weaker dollar.

Zinc was up 1.6% at $3,031, lead added 0.4% to $2,149, tin rose 2.3% to $34,600 and nickel was down 0.2% at $17,935. (Reporting by Pratima Desai Editing by Jan Harvey and David Goodman )

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