Aluminium prices dip on high stock

Aluminium fell to a one-week low after inventories of the metal used in beverage cans and aircraft rose to a three-year high, stoking speculation about surplus supply. Copper and lead also declined.

Aluminium inventories jumped 12,900 tonnes, or 1.6 per cent, to 839,625 tonnes, the exchange said today, the highest since August 4, 2004. Production will beat demand by about 68,000 tonnes this year, according to Merrill Lynch & Co, the third-largest US securities firm.

"The market is clearly well supplied," Daniel Hynes, a metals analyst at Merrill Lynch in London, said today by phone. China, the world's largest producer and consumer of the metal, has increased output, he said.

Aluminium for delivery in three months dropped $27.50, or 1.1 per cent, to $2,516.50 a tonne as of 10:37 a.m. in London. Earlier it traded at $2,506, the lowest intraday price since August 22. The metal has fallen 10 per cent this year. LME-monitored stockpiles have risen 57 per cent in two years.