LONDON: Aluminium shrugged off gloomy sentiment weighing on financial markets, with prices rising on worries over supply from major producer Russia because of the Ukraine crisis.
Russia’s Rusal is one of the world’s biggest producers of aluminium and prices rocketed in 2018 to seven-year highs when the United States imposed sanctions on the company.
Three-month aluminium on the London Metal Exchange (LME) gained 1.9% to $3,086 a tonne by 1700 GMT, in sharp contrast to losses for most other metals.
“As we saw a few years ago when there were sanctions on Rusal, the price shot up. So if there are sanctions placed on Russia because it does invade Ukraine, it could imperil supply of many metals, including aluminium,” said independent consultant Robin Bhar.
“Also because of the energy crunch in China and in Europe, we’ve had 700,000 tonnes per year of output that’s already been curtailed.”
Russia said on Tuesday that it was watching with great concern after the United States put 8,500 troops on alert to be ready to deploy to Europe in case of an escalation in the Ukraine crisis.
Global financial markets were nervous about rising tensions over Ukraine and ahead of a meeting of the US Federal Reserve. Global shares are set for their biggest monthly drop since the pandemic hit markets in March 2020.
Most base metals extended their decline after sharp losses on Monday.
In China, the March nickel contract on the Shanghai Futures Exchange dropped by as much as the session’s 8% lower limit to 163,460 yuan ($25,823.88) a tonne.
LME nickel eased by 0.3% to $22,335 a tonne after diving 6.8% on Monday.
The metal used to make stainless steel and chemicals for electric vehicle batteries touched $24,435 a tonne last week, its highest since August 2011.
The global zinc market deficit edged lower to 19,700 tonnes in November, down from a revised shortfall of 22,100 tonnes a month earlier, while the lead market flipped into a 20,700 tonne surplus in November from a deficit the previous month, data showed.
LME copper advanced 0.7% to $9,796.50 a tonne, but zinc slipped 0.6% to $3,575.50, lead lost 1% to $2,335 and tin slumped by 2.3% to $41,580.
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