Aluminum prices on the Shanghai Futures Exchange continued to soar on Thursday as investors eyed the metal as an alternative to copper.

The most active aluminum contract, for October delivery, rose about 1.4 percent to settle at 18,455 yuan ($2,860.58) per ton. The contract was up 4.9 percent since the previous Friday, far more than other base metals. For example, the most traded SHFE copper contract was up 1 percent for the week.

Aluminum fundamentals have been strong lately, which has attracted speculators betting that prices will rise, according to Tong Changzheng, an analyst at Huatai Great Wall Futures.

Over the last few months, several analysts have told the Global Times that aluminum’s fundamentals are the strongest of the SHFE-traded base metals.

Some analysts have suggested that copper prices above 70,000 yuan per ton are just too high for most buyers, especially amid the current dour global economic landscape.

The October delivery copper contract slipped about 0.2 percent on Thursday to settle at 72,710 yuan per ton, bouncing back after falling 0.6 percent when the market opened.

The benchmark three-month copper contract on the London Metal Exchange lost 0.4 percent in Wednesday’s session, before inching up on Thursday. It was trading at $9,792 per ton, up 0.1 percent when the SHFE closed.

With a limited upside for copper, investors may have turned to aluminum.

But if this is the case, it won’t be much of a trend. SHFE aluminum rapid rise this week is based on a favorable short-term supply and demand basis, said an analyst surnamed Yuan with Shanghai East Asia Futures.

“Right now, investors show a preference for a short-term imbalance between supply and demand because of the bleak economic prospects,” Yuan said.

Zinc for October delivery slipped 0.1 percent to settle at 19,010 yuan per ton. The September delivery lead contract gained about 0.5 percent to settle at 17,645 yuan per ton.

Demand for physical gold in China may exceed consumption in India by the end of this year, said Chuck Jeannes, chief executive officer of Goldcorp Inc. (G), the world’s No. 2 producer of the metal by market value.
“Three or four years ago there was no one who would have expected Chinese physical demand for gold to surpass India,” Jeannes said yesterday in a telephone interview from New York. “Now it looks like that could happen as early as the end of this year. And that’s while Indian demand is increasing.”
While global demand for gold is advancing on concerns about financial turmoil in the U.S. and some European countries, consumers in China are buying larger amounts of the metal as an inflation hedge, Jeannes said.
Investment demand in China more than doubled in the first quarter to 90.9 metric tons as the nation overtook India to become the largest market for coins and bars, the World Gold Council said in May.

India was the largest consumer of gold jewelry last year, according to data compiled by Bloomberg. Gold reached a record $1,631.20 an ounce on July 27 in New York on concern about a potential U.S. default and is heading for an 11th straight annual increase.
Demand for gold in both China and India may help lift the price of the precious metal, said Jeannes, who said he expects gold to advance to $1,700 an ounce by the end of the year.
“I predicted a $1,600 gold price at the beginning of the year, and am happy to see it there now,” Jeannes said. “I wouldn’t be surprised to see it move significantly higher by the end of the year.”
Goldcorp, based in Vancouver, is second by market value after Toronto-based Barrick Gold Corp., the world’s largest gold producer.