Aluminium prices in Shanghai fell, snapping a five-day rally, on speculation some Chinese smelters took advantage of the recent gain by increasing forward sales.

The price of the metal used to make beverage cans and cars rose 11 percent in the past five days, the biggest gain in four months, amid speculation supply may not meet demand in China, the world's biggest user. The advance encouraged some Chinese smelters to lock in future production at the higher prices, trader Shen Haihua said.

"Producer hedging is depressing prices," Shen, vice president of Maike Futures Co., said by phone from Shanghai. "I'm cautious about aluminium's outlook because alumina prices have been falling," he said, referring to the material from which aluminium is made.

Aluminium for November delivery fell as much as 850 yuan, or 4 percent, to 20,170 yuan ($2,536) a metric ton on the Shanghai Futures Exchange. It traded at 20,320 yuan by midday break.

Prices for three-month delivery yesterday rose to an eight- week high of $2,687 a ton on the London Metal Exchange after inventories fell to the lowest since Aug. 21. The metal fell $15, or 0.6 percent, to $2,655 a ton at 11:55 a.m. Shanghai time.

Charts some traders use to predict price moves indicate that aluminium is "fast approaching resistance," or levels where sell orders are clustered, Barclays Capital's technical analysts led by Jordan Kotick said in a report yesterday.
Copper falls

Copper futures in Shanghai fell as speculators turned their attention to aluminium, Shen said.

Copper for November delivery in Shanghai fell as much as 1,030 yuan, or 1.4 percent, to 73,780 yuan a ton. It closed the morning session at 74,120 yuan. A total of 26,950 lots were traded, compared with 245,118 lots of aluminium.

The price of the metal used to make wires and pipes may resume rising as output disruptions may cut supply, he said.

Workers at BHP Billiton Ltd.'s Spence copper mine in Chile are expected to vote Sept. 15 to strike. An almost four-week stoppage at BHP's Escondida mine in Chile that cut copper output by about 45,000 tons ended Sept. 2.

A strike at Spence will postpone the start of copper production at the mine, scheduled for October, Andres Ramirez, president of the union at Spence, said yesterday from the Chilean city of Antofagasta.

Copper for immediate delivery in Changjiang, Shanghai's biggest spot market, fell as much as 0.5 percent today to 74,650 yuan a ton. Chinese users have to pay 17 percent value-added tax, 2 percent import tax, premiums and freight charges for imported copper.

Copper for three-month delivery fell $5, or 0.1 percent, to $8,010 a ton on the London Metal Exchange at 11:58 a.m. Shanghai time. Metal for delivery in December fell 0.1 cent to $3.647 a pound on the Comex division of the New York Mercantile Exchange at 11:58 a.m. Singapore time in after-hours trade.