Aluminium hits record $2218 on LME, local prices follow suit

Domestic wire scrap and utensils scrap prices increase Rs 98 and Rs 88 a tonne, respectively

Aluminium futures (three-month) on the London Metal Exchange (LME) touched a new high at $2,218 a tonne on Monday, after having breached the psychological $2,200 a tonne level, riding on a fresh wave of fund-buying.

"There has been an enormous amount of investment, and the funds are looking to keep the prices up till the year-end when they (aluminium producers) report results," said a Sucden daily note.

Despite the dollar surge, most metals "" like precious and base metals "" continue to soar on the back of keen interest in commodities. While most international funds continue taking positions for aluminium on the LME, market players feel the metal is highly overbought. Also, aluminium stocks on the LME have seen a rise.

Besides, aluminium is getting support from the bull run that is continuing in copper. "With copper witnessing good support from funds, aluminium prices will also move upwards," said Nitesh Jain, a Mumbai-based base metals trader. However, three-month copper futures on the LME failed to scale the psychological $4,400-a-tonne level.

Jain said copper wire manufacturers would turn to aluminium - and even zinc - for a possible substitute to the red metal, if the metal continues to dent wallet. A section of the market feels copper price may rise further to $4,500-5,000-a-tonne level in about two months and, thereby, pull up aluminium prices to about $2,500 a tonne.

But another section, which included a senior analyst, begs to differ. It feels prices have already soared too high, and any further upward movement is not justified as demand is not coming from the physical market.

Today, domestic market, too, found aluminium prices to be on an upswing, in tandem with overnight rise on the LME. While aluminium wire scrap rose by Rs 98 per tonne, utensils scrap zoomed by Rs 88 a tonne. "This is more in tandem with rising international prices than rising domestic demand," said a trader.

Earlier this month, domestic aluminium producers "" National Aluminium Co and Hindalco "" had increased their product prices by about Rs 6,000 a tonne, the fourth consecutive rise on month.

Local producers assess "" and even revise "" prices at the end of each month in line with the prevailing overseas prices.

Aluminium is used in various sectors like automobile, infrastructure, construction and packaging.