LONDON: Aluminium prices rallied on Wednesday as focus switched to pricing in global supply losses from the Middle East conflict, after a brief sell-off triggered by comments from US President Donald Trump on the Iran war.
Benchmark aluminium on the London Metal Exchange was up 1percent at USD3,439 a metric ton at 1018 GMT. Earlier this week, it touched USD3,544 a ton, the highest since April 2022. The Middle East is home to around seven million metric tons of aluminium smelting capacity, or roughly 9percent of the global total. Trump on Monday predicted the conflict would end well before the initial four-week timeframe he had laid out.
But the war has effectively frozen shipments due to the closure of the Strait of Hormuz and threatened global supplies of aluminium used in transport, construction and packaging. Last week, Aluminium Bahrain or Alba, which runs one of the world’s biggest smelters, declared force majeure warning customers of delays to shipments while Qatari smelter Qatalum started to shut down.
Reinforcing concerns about supplies are aluminium stocks in LME-approved warehouses. Cancelled warrants or metal earmarked for delivery stood at 177,325, or 40percent of the total on Tuesday, compared with 9percent on February 27, before the turmoil in the Middle East started. Worries about tight aluminium supplies have created a premium or backwardation for the cash contract over the three-month forward on the LME.
Industrial metals overall are under pressure from concerns about global economic growth as a result of soaring oil prices and a firmer dollar. A rising US currency makes dollar-priced metals more expensive for holders of other currencies, which could subdue demand. Clues to US monetary policy and the dollar’s prospects could come from inflation data due on Wednesday.
Copper was down 1.1percent at USD12,997 a ton, zinc slipped 0.6percent to USD3,326, lead retreated 0.2percent to USD1,940, tin dropped 1.3percent to USD49,800 and nickel ceded 0.4percent to USD17,425.
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