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LONDON: Aluminium on Thursday approached levels not achieved since 2018, closing in on $2,500 a tonne as positive economic data and rising tensions between top producer China and major raw materials supplier Australia added momentum to the rally.

Prices have rocketed 25% this year as commodities and equities markets surged and investors anticipate that a crackdown on polluting smelters in China will constrain supply.

Adding impetus was China saying it would “indefinitely” suspend all activity under a China-Australia Strategic Economic Dialogue, deepening a crisis in relations.

Australia is a major producer of bauxite and alumina, which are used to smelt aluminium.

Benchmark aluminium on the London Metal Exchange (LME) had climbed 2.1% to $2,494.50 a tonne by 1605 GMT.

The most active aluminium contract on the Shanghai Futures Exchange closed 2.7% up at 19,385 yuan ($2,992.67) a tonne after hitting its highest since January 2010.

Prices are likely to keep rising, said independent analyst Robin Bhar.

“Investors and others have the bit between their teeth,” he said. “If China is stricter on closing polluting production capacity and we get a more balanced market ... maybe we can see $3,000 a tonne (on the LME).”

Global shares rose close to record highs while the dollar weakened.

Unemployment data showed a US labour market recovery gaining steam. In Germany, strong domestic demand for consumer goods propelled a bigger than expected jump in industrial orders.

China’s anti-pollution drive is not yet curbing aluminium output and prices may be too high, analysts at Commerzbank said. “In the short term the global aluminium market should remain well supplied,” they said.

Cash aluminium on the LME has flipped to a premium against the three-month contract, from a $35 discount in mid-March, suggesting there is less quickly deliverable metal available.

Tight supply pushed LME tin above $30,000 a tonne for the first time since 2011, with prices up 1.1% at $30,015.

Copper was up 1.4% at $10,085.50 a tonne, zinc was 0.3% higher at $2,940.50, nickel was flat at $17,900 and lead gained 1.7% to $2,212.

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