Aluminium hits one-week low as alternative Gulf shipping routes provide some relief

LONDON: Aluminium prices fell on Wednesday as Emirates Global Aluminium (EGA) secured alternative export routes to the Strait of Hormuz amid the U.S.-Israeli war on Iran, easing some of the immediate worries about the Middle East supply.

The benchmark three-month aluminium on the London Metal Exchange dropped 1.2% to $3,359.50 a metric ton by 1113 GMT after hitting $3,336, the lowest level since March 10.

“Despite the drop from recent highs, prices are expected to remain elevated due to the growing supply squeeze caused by the Middle East conflict driven production disruptions and the pending plunge in inventories,” said Bart Melek, head of commodity strategy at TD Securities.

Normally, over 5 million tons of aluminium are shipped through the Strait of Hormuz each year by smelters in Bahrain, Qatar, Saudi Arabia and the United Arab Emirates, he added. Vast quantities of bauxite and alumina travel the other way to feed the smelters.

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In the physical market, the duty-paid premium aluminium consumers in Europe pay above the LME price rose this week to $450 a ton, its highest since August 2022.

LME copper fell 0.6% to $12,694 after hitting $12,635, the lowest since March 9, weighed down by rising inventories in the LME system and inflation risks amid the Middle East conflict.

Copper stocks in LME warehouses are at 334,100 tons, their highest since August 2019, with 3,775 tons of inflows to the LME-registered warehouses in the U.S., LME daily data showed.

With plenty of metal available for the nearby supply, the discount of the LME cash copper contract against the three-month contract closed on Tuesday at $113.5 a ton, its highest level in 13 months.

China’s copper exports almost doubled in January-February from a year earlier.

Among other LME metals, zinc dropped 1.0% to $3,194.50 after touching $3,177, its two-month low, lead eased 0.1% to $1,926.50, tin gained 0.1% to $46,605, while nickel rose 0.9% to $17,345.