Aluminium breaks $3 000 for the first time in 13 years

accreditation
0:00
play article
Subscribers can listen to this article
The increase is partly owing to concerns about supplies following of a coup in major bauxite producer Guinea as well as low Chinese output.
The increase is partly owing to concerns about supplies following of a coup in major bauxite producer Guinea as well as low Chinese output.
Shutterstock
  • Aluminium broke $3 000 a ton for the first time in 13 years on Monday.
  • This is partly owing to concerns about supplies following of a coup in major bauxite producer Guinea as well as low Chinese output.
  • Equity markets were mixed as record-high US inflation ramped up concerns the Federal Reserve will have to tighten monetary policy sooner than later.


Aluminium broke $3 000 (~R42.6 000) a ton for the first time in 13 years on Monday on supply concerns, while equity markets were mixed as record-high US inflation ramped up concerns the Federal Reserve will have to tighten monetary policy sooner than later.

Reports that US President Joe Biden was considering a fresh trade probe into China added to the downbeat mood and nullified the optimism sparked by news that he had held talks on Friday with China's President Xi Jinping in a bid to smooth relations between the superpowers.

After driving a healthy run-up in Asia so far this month, investor sentiment was once again roiled by data on Friday showing US factory gate inflation had soared in August to an all-time high of 8.3 percent owing to a jump in demand as well as supply and labour shortages.

The reading was fuelled partly by a sharp rise in commodity prices, a concern highlighted by news that aluminium had rocketed past $3 000 a ton for the first time in 13 years, owing to concerns about supplies in light of a coup in major bauxite producer Guinea as well as low Chinese output.

The data ramped up speculation about the Fed's plans for monetary policy.

Its boss Jerome Powell has already indicated that the central bank will likely start tapering its vast bond-buying programme - which has been a key driver of the economic and equity markets recovery - by the end of the year.

But the latest figures could cause officials to bring forward their timeline. The release Tuesday of consumer inflation has now taken on more significance.

"With the US Federal Reserve due to meet next week, and the narrative clearly moving towards a tapering of asset purchases sooner rather than later, there appears to be a build up in anxiety that the continued rise in inflationary pressure may well be much more persistent than central bankers would have us believe," said CMC Markets analyst Michael Hewson.

China-US trade worries

On Monday morning, the JSE's All Share Index was flat, and the rand was trading at R14.19/$. Northam, Implats and Anglo Platinum all gained 2%.

All three US indexes ended in the red on Friday, with reports of Biden's probe adding to the selling pressure.

The president was said to be looking at Beijing's subsidies and their effect on the US economy, the reports said, with discussions also being held on last year's trade deal agreed by Donald Trump.

"While initially markets traded positively on the hopes that a restart in high-level dialogue might eventually lead to a reduction in Chinese tariffs," news about the investigation "delivered the opposite outcome", said National Australia Bank's Rodrigo Catril.

"That said, it is unclear when the White House will announce the outcome of its review and as we know from the Trump era, any action against China is likely to come with retaliations."

Hong Kong led the losers, with tech firms again taking much of the heat on lingering concerns about China's crackdown on the sector. Market heavyweight Alibaba plunged more than four percent after Chinese regulators ordered sweeping changes to the country's biggest payment app Alipay.

Alipay - with more than a billion users in China and other Asian nations - was told to spinoff its profitable micro-loan business, the Financial Times reported Monday.

"The government believes big tech's monopoly power comes from their control of data," the source close to financial regulators told the newspaper. "It wants to end that."

The firm's parent company Ant Group is China's biggest payments services provider and part of the Alibaba empire.

Singapore, Taipei, Manila, Mumbai, Bangkok and Jakarta were also down but Tokyo, Shanghai, Sydney, Seoul and Wellington edged higher.

London, Paris and Frankfurt were all up in the morning session.

"Risk assets will continue to struggle in the near term with weak hard data due to the Delta (coronavirus) outbreak and supply disruptions over the summer," Barclays strategists including Shinichiro Kadota said.

Traders are also keeping tabs on the Korean peninsula after the North test-fired a new "long-range cruise missile" over the weekend, calling it a "strategic weapon of great significance".

The US military described the move as posting "threats" to the country's neighbours and beyond.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
15.04
-1.5%
Rand - Pound
20.67
-1.4%
Rand - Euro
17.44
-1.5%
Rand - Aus dollar
11.30
-1.8%
Rand - Yen
0.13
-1.8%
Gold
1,794.79
+0.1%
Silver
24.06
-0.4%
Palladium
1,963.00
-2.3%
Platinum
1,012.50
-1.8%
Brent Crude
86.40
+0.5%
Top 40
60,874
-0.3%
All Share
67,475
-0.2%
Resource 10
63,082
-0.9%
Industrial 25
87,253
+0.1%
Financial 15
14,054
+0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Facebook is facing a fresh crisis after a former employee turned whistle-blower leaked internal company research . Do you still use Facebook?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, the benefits outweigh the risk for me
26% - 351 votes
No, I have deleted it
44% - 585 votes
Yes, but I am considering deleting it
30% - 394 votes
Vote