Aluminium prices jump to their highest since 2008

LONDON: prices rose to their highest since 2008 on Tuesday, buoyed by investor concern over tight supply and falling inventories.

Benchmark aluminium on the London Metal Exchange (LME) was up 3% at $3,226 a tonne by 1400 GMT after touching $3,236.

The lightweight metal used in packaging and transport has shot up by 15% this year after gaining 42% in 2021 as China, which produces more than half the world's supply, restricted output to reduce pollution.

Chinese smelters use huge amounts of electricity generated by coal-fired power plants.

"In the run-up to the Beijing Olympics there's been a lot of reduction in aluminium production to improve air quality," said WisdomTree analyst Nitesh Shah, predicting that rising demand would push prices higher over the long term.

Shanghai aluminium rises 3% on supply woes, low inventories

Outbreak: Compounding supply fears was an outbreak of COVID-19 in the aluminium-producing Chinese city of Baise.

Aluminium output in Baise, which has gone into lockdown, remains stable though transportation disruptions are starting to weigh, the local industry association said.

Inventories: Aluminium stocks in LME-registered warehouses have fallen to the lowest level since 2007 at 767,700 tonnes, down from almost 2 million tonnes last March.

Inventories in Shanghai Futures Exchange (ShFE) warehouses have fallen nearly 20% to 266,906 tonnes since the start of the year -- a period in which ShFE stocks typically rise.

Spread: Concern about supply on the LME drove quickly delivered cash metal's premium over the three-month contract to $40 a tonne, its highest since July 2018.

Russia: The threat of sanctions against Russia if it attacks Ukraine has intensified supply concerns. Russia is a major aluminium producer.

Slovalco: Slovak aluminium smelter Slovalco on Monday said it had cut output to about 60% of capacity because of the high cost of power and emissions allowances and a lack of government compensation.

Peru Copper: Mining activity at Peru's Las Bambas copper mine, which accounts for 2% of global supply, has started to fall sharply after protesters blocked a key access road.

Column: Copper could face another inventory squeeze, writes Reuters columnist Andy Home.

Other Metals: LME copper was flat at $9,775 a tonne, zinc fell 0.1% to $3,623, lead rose 0.1% to $2,198.50, tin was up 0.6% at $43,215 and nickel was down 0.6% at $23,255.