Industrial metals slip on China Covid surge; aluminium prices shed 2.1%; Russia limits profits of its metallic firms

Industrial metals prices slipped as rising cases of the Omicron variant of Covid-19 dampened the economic outlook for top metals consumer China, but supply concerns underpinned prices.

Benchmark prices for aluminium shed 2.1 per cent to $3,252 per tonne in official trading activity, after sinking 4.7 per cent in the previous session. Three-month copper was down 0.8 per cent to $9,860 per tonne.

China’s economy perked up in the first two months of 2022, with key indicators exc­eeding analysts’ expectations, however, a surge in Omicron cases, property weakness and heightened global uncertai­nties weighed on the outlook.

Concerns that Russia’s invasion of Ukraine would interrupt metal flows and raise the cost of gas has boosted metals prices, especially of aluminium and zinc, which are energy-intensive. Russia produces about 6 per cent of the world’s aluminium, 7 per cent of global nickel and accounts for about 3.5 per cent of copper supplies.

China’s daily aluminium output in January and February rose to its highest since mid-2021 despite pollution curbs in the heating season and during the Winter Olympics, as smelter hubs located away from the capital Beijing maintained operations.

Meanwhile the Russian government has directed steel and other metal producers to reduce their profit margins on domestic sales to a maximum of 20%-25% in order to keep local prices low, according to a meeting between Russia’s deputy minister for industry and steel companies’ representatives. “Today’s prices for metallurgical products do not suit us,” Russia’s Deputy Minister of Industry and Trade,” Viktor Evtukhov, said during the meeting. “Metallurgical products must be sold in Russia at low prices,” Evtukhov said during the meeting.

Regarding foreign markets, they “are no longer relevant or no longer interest anyone [in Russia] today,” he added. He requested the steel companies to submit information on the costs of their production and new price listed by early this week starting March 13.

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