Shanghai aluminium falls on oversupply concerns

Shanghai aluminium fell half a percent on Monday after a 3 percent slide in London on Friday as mounting stockpiles in Shanghai and London sparked investor worries that the market was over supplied.

Shanghai October aluminium the most-traded aluminium contract on the Shanghai Futures Exchange, fell 95 yuan to 19,165 yuan ($2,806) at the end of the morning session, while aluminium for delivery in three months on the London Metal Exchange gained $9 to $3,043 by 0330 GMT.

Aluminium inventories in LME warehouses rose 4,325 tonnes to more than 1.1 million tonnes on Friday, the highest since May 2004, while the stocks in Shanghai hit an all-time high of 189,094 tonnes.

Aluminium has had a stellar performance since the start of this year, with the London price rising 27 percent due to the prospect of global output declines caused by growing production prices and power outages in major producers.

The recent surge in the aluminium prices was fuelled by announcement of China's top 20 smelters to cut production by up to 10 percent from July to reduce power consumption.

Shanghai Futures Exchange October copper rose 130 yuan to 62,200 yuan at the midday break, while LME three-month copper was up $30 at $8,110.

The gap in prices between London and Shanghai copper futures narrowed to 2,630 yuan, from 2,647 yuan on Friday, including Chinese value-added tax. The gap reached its widest ever, at 6,719 yuan, on July 3.

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