Aluminum heads for three-year high as US-China tensions ease

Aluminum gained more than 7% in October, its best showing in more than a year

Aluminum headed for the highest close since May 2022, as base metals rose along with other risks assets after an easing in US-China tensions.

Metals had a nervy start on Monday, before moving higher along with stocks, as investors mull what’s next after the trade truce between Beijing and Washington forged at last week’s summit. Aluminum and copper have also both benefited from perceived supply constraints in recent months.

Aluminum gained more than 7% in October, its best showing in more than a year. The trade agreement between the US and China lifts, at least for now, a major source of uncertainty for the global economy and commodities’ demand. The two sides reached a broad rapprochement under which many issues of contention will be revisited a year from now.

The lightweight metal has also benefited from a tighter market as China’s production starts to bump up against an official cap on the size of the industry. Copper, meanwhile, has been boosted by unexpected mine disruptions at major sources of supply from Asia to Africa, and surged to a record last week.

Still, risks remain, not least slowing momentum in China’s economy. A private survey of manufacturing fell by more than expected to 50.6 in October, and the country’s official factory gauge last week notched its longest run of declines in more than nine years.

Aluminum rose 0.9% to $2,909.50 a ton on the London Metal Exchange by 7:18 a.m. local time. Copper added 0.2% to $10,903.50 a ton, a little below its record of $11,200.