Aluminium slips as alternative shipping routes ease supply concern

LONDON: Aluminium fell on Wednesday as supply fears eased after Emirates Global Aluminium (EGA) secured alternative export routes, following the shutdown of the Strait of Hormuz amid the US-Israeli war on Iran.

The most-active aluminium contract on the Shanghai Futures Exchange eased 0.98percent to close daytime trade at 24,800 yuan (USD3,608.06) a metric ton.

The benchmark three-month aluminium on the London Metal Exchange declined 1.04percent to USD3,364 a ton as of 0712 GMT. EGA will route its aluminium exports and raw materials through Oman’s Port of Sohar in the coming days, Reuters reported on Tuesday, as the crucial Strait of Hormuz remains effectively shut.

Meanwhile, Aluminium Bahrain (Alba) is also exploring alternative routes via Sohar or Jeddah on Saudi Arabia’s Red Sea Coast. The availability of alternative shipping channels has offered some relief to supply fears, traders said.

But concerns over production and shipping disruptions persist as the war enters its third week. Alba has initiated a shutdown of 19percent of its capacity, while Qatalum - a major aluminium smelter in Qatar - is operating at roughly 60percent.

Meanwhile, some aluminium buyers in Japan, a major importer in Asia, have agreed to pay a USD350 premium per ton for second-quarter shipments, a 79percent jump from the current quarter. Copper also fell, weighed by inflation and growth fears linked to higher energy costs and rising inventories in LME sheds.

The Shanghai most-traded copper contract lost 1.47percent to 98,590 yuan a ton, and the London benchmark copper dropped 0.49percent to USD12,712.

Copper stocks in LME warehouses climbed to 330,375 tons, the highest since August 2019, while inventories at SHFE warehouses have also been rising steadily since December.

Among other SHFE base metals, zinc lost 2.28percent, nickel dropped 1.42percent and tin slid 2.59percent. Lead, up 0.88percent, was the sole gainer. Elsewhere on the LME, zinc dropped 0.31percent and tin shed 0.70percent. Lead rose 0.21percent and nickel added 0.29percent.