LONDON: Aluminium rose on Tuesday, balancing near four-year highs and heading for the biggest monthly gain since 2018, due to fears of a prolonged supply squeeze after Iranian strikes damaged key Gulf smelters over the weekend.
Benchmark three-month aluminium on the London Metal Exchange rose 3.1percent to USD3,505 a metric ton in official open-outcry trading having earlier hit USD3,536, its highest since March 12.
Iran’s attacks damaged two aluminium plants operated by Aluminium Bahrain and Emirates Global Aluminium in the Gulf region, accounting for 8percent of global supply. Neither company has provided an update on their operations.
“The market is waiting for some clearer news over the extent of what’s happened,” said BNP Paribas commodities strategist David Wilson. “We haven’t had any official confirmation yet of the extent of any damage.”
A break above USD3,546.50 from March 12 for aluminium would open the way to peaks last seen four years ago, when the markets were grappling with the immediate consequences of Russia’s invasion of Ukraine.
The metal is up 12percent so far in March, its biggest monthly gain since April 2018, when the United States imposed — and later lifted — sanctions on Russian aluminium producer Rusal.
With aluminium stocks in the LME-registered warehouses at 416,775 tons, their lowest level since July, the aluminium market has been tight in March.
The premium for LME cash metal over the three-month contract hit USD61 a ton, its highest since 2007, on Friday, signalling worries about the availability of the immediate supply. The premium was last at USD50 on Tuesday.
On the ex-Gulf supply side, Indonesian state aluminium company PT Inalum on Tuesday called for the government to impose a moratorium on new alumina and aluminium plants.
Among other LME metals, copper and zinc gained 0.1percent to USD12,234 a ton and USD3,185, respectively, in official activity. Lead remained at USD1,909, while tin fell 1.7percent to USD45,950 and nickel lost 1.1percent to USD17,080.
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