Aluminium hits 9-1/2 month high

Aluminium prices hit their highest in 9-1/2 months on Monday as inventories continued to decline and speculators piled into the market after key chart-based levels were breached.

Zinc hit its highest in 15-1/2 months on strong demand, but copper slipped to a one-month low on concerns that a probe into metals storage and financing fraud at a Chinese port could cut investor buying interest.

Prices for aluminium, the second most widely used metal after steel, have been under pressure for years as the market struggles with oversupply and towering stocks.

Three-month aluminium on the London Metal Exchange (LME) hit a session peak of $1,918 a tonne, the strongest since Aug. 22, 2013, before paring gains to close at $1,911, up 1.8 percent.

"The move is quite bullish as it is independent from forex," said Gianclaudio Torlizzi, partner at metals consultancy T-Commodity.

Computer-driven speculative funds were behind the latest surge after aluminium broke above a peak touched in April, he said, adding the next target was $1,945 a tonne.

"I am reasonably bullish on aluminium this year due to supply tightness. Aluminium has seen the highest reduction of on-warrant stock year-to-date among the LME complex," he said.

LME on-warrant stock - those inventories not ready to be delivered and therefore available to the market - in aluminium has declined by a quarter to 2.32 million tonnes this year.

Russian producer Rusal said it expects prices may rise as far as $2,000 a tonne in the coming months on to a combination of bullish physical and technical factors.

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