Aluminium rebounds on supply concerns amid US-Iran standoff

LONDON: Aluminium prices bounced back on Friday on fears of supply shortages as the standoff between the U.S. and Iran continued, constricting shipments from the Gulf region, home to large smelters.

Iran said on Thursday it would respond with “long and painful strikes” on U.S. positions if Washington renewed attacks.

Benchmark three-month aluminium on the London Metal Exchange rose 1.2% to $3,515 a metric ton by 0950 GMT after five sessions of losses.

The metal used in construction, transport and packaging hit $3,672 a ton on April 16, its highest in four years after disruptions to operations in the Gulf, which account for about 9% of global production. However, prices lost steam after a truce halted attacks.

“It’s the threat of supply side destruction from a prolonged war, given that the facilities in Qatar and Bahrain won’t open up anytime soon,” said Nitesh Shah, commodity strategist at WisdomTree.

Middle East conflict disrupts scrap supplies to India’s aluminium producers, raises costs

“There’s indications of escalation, then de-escalation, and you don’t really know where you are at any point in the day. It keeps things pretty choppy on prices.”

Emirates Global Aluminium said fully restoring primary aluminium production at its Al Taweelah smelter that was hit by an Iranian attack could take up to a year.

The premium of the LME cash contract to the three month future rose 7% to $60 a ton on Friday, having more than doubled since April 17, indicating worries about short-term supply.

Trading activity was muted, with the Shanghai Futures Exchange closed until Wednesday for the Labour Day holiday.

LME copper was barely firmer, up 0.2% to $13,013 a ton.

The combination of high energy prices and high copper prices do not bode well for copper demand, Commerzbank analyst Thu Lan Nguyen wrote in a note.

Copper inventories in Shanghai Futures Exchange warehouses have more than halved from a peak in March, supporting prices, but this is in line with seasonal trends and inventories elsewhere are high.

LME three-month zinc slipped 0.3% to $3,351.50 a ton, lead gave up 0.5% to $1,945, nickel added 0.4% to $19,550 and tin edged down 0.1% to $49,265.