LONDON: Aluminium and copper prices marched higher on Thursday on worries that stoppages due to high energy prices or other disruptions will spur shortages.
Benchmark aluminium on the London Metal Exchange gained 1.5% to $2,268 a tonne by 1040 GMT, while copper advanced 1.5% to $7,739.
“We are seeing output cuts in Europe so the potential is high for a squeeze higher in base metals prices, especially in aluminium, since it is so energy intensive,” said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.
“We are in a situation where we don’t have a push from consumption to get a spike in prices, because more cuts will be coming, the energy crunch is far from over in Europe.”
European smelters are estimated to have cut an annualised 800,000 to 900,000 tonnes of aluminium production since energy prices began to rise last year.
Torlizzi said LME aluminium was getting an added boost because a physical arbitrage window from the LME to China had opened for the first time in many months.
Aluminium slides on strong dollar and demand outlook
Indonesian President Joko Widodo reiterated that his country will stop exporting raw copper, bauxite and tin to help it jump up the value chain.
Workers at BHP’s Escondida in Chile, the world’s largest copper mine, voted on Wednesday to go on strike.
The premium of LME cash copper over the three month contract jumped to $129 a tonne on Thursday, the highest since last November, showing near-term tightness in LME inventories.
LME copper stocks have shed 22% over the past four weeks to 102,725 tonnes, the lowest in five months.
In other LME metals, zinc rose 0.7% to $3,144.50 a tonne and tin climbed 1.4% to $21,135, but nickel slipped 0.5% to $21,465 and lead fell 0.5% to $1,893.50.
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