The Hindu Business Line : Aluminium seen rising this week

There is strong buying interest for aluminium in Asia. Prices of this metal are poised for a further rise this week, signalling solid demand conditions. This is despite rising inventory inflows into warehouses. Singapore warehouse of LME received over 2,200 tonnes towards last week-end.

Reports circulating in the market suggest South Korean aluminium importers are likely to accept higher contract premiums. Market watchers assert that the premiums will continue to firm through this year on the expectation that inventories (partly in ports) will decline.

China's role in copper

Copper market too is strengthening with strong buying support partly from China. The third month copper is seen building a floor around $4,650-4,700 a tonne, according to expert opinion.

Strong prices have coincided with the announcement that China will double the export tax on refined copper and copper alloys to 10 per cent and add a 10 per cent tax on exports of copper products from April 10 to curb overseas sales of `energy intensive' products.

However, there are differences of opinion about China's role in the global copper market. The country is not perceived as a natural exporter of copper; and therefore, the rise in exports of refined copper seen in recent months does not make sense.

Indeed, in the absence of sufficient internal resources, China is a significant importer of copper (refined, concentrate and scrap) in response to strong domestic demand which is driven not only by the build up in power transmission infrastructure, but also by construction and electronics sector boom.

An explanation of recent rise in China's refined copper exports could be found in higher international prices compared with domestic prices which has resulted in some consumer de-stocking. However, in case of copper products, the new 10 per cent tax is likely to have a dampening effect on exports.