Aluminum fell the most in more than a week as slumping oil prices signal lower costs to produce the energy-intensive metal. Nickel rose.
“The entire commodity complex is having a reaction to crude and the U.S. dollar strength,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, Told Bloomberg News by e-mail. “There is that potential on the headlines and less Petro dollars available to invest in the commodity space.”
While crude is not the primary source of energy for the aluminum producers, energy accounts for about 30 percent of output costs and falling oil prices may have a deflationary impact, according to Macquarie Group Ltd. OPEC took no action to ease a global supply glut, sending Brent and West Texas Intermediate futures to the lowest in more than four years.
Chinese aluminum bar had the largest decline on Monday, December 1, dropping 7.4% and landing at CNY 13,520 ($2,201) per metric ton. The price of Chinese aluminum scrap fell 2.3% to CNY 12,700 ($2,067) per metric ton. The Chinese aluminum cash price weakened by 0.7%, settling at CNY 13,520 ($2,201) per metric ton. Chinese aluminum billet held its value on Monday at CNY 13,900 ($2,263) per metric ton.
On the LME, the aluminum 3-month price declined 1.9% to $2,025 per metric ton. On the LME, the primary aluminum cash price fell 1.3% to $2,071 per metric ton. The Indian aluminum cash price saw a 0.9% decline to INR 125.65 ($2.02) per kilogram.