LONDON: Aluminium prices on Friday reached their highest since Oct. 21 as the amount of metal available in London Metal Exchange warehouses fell and traders worried that high energy costs would force more smelters to cut output, worsening a supply shortage.

Benchmark aluminium

on the LME rose as high as $2,980 a tonne before slipping back to $2,908.50 a tonne by 1522 GMT, down 0.4% for the day.

Prices were still up around 3.5% this week after rising 42% in 2021.

Energy prices have rocketed in Europe and Asia and more smelters will likely cut production before spring, pushing aluminium prices higher, said Commerzbank analyst Daniel Briesemann.

“Once we get out of winter, we should see a correction because more supply should be available again,” he said.

STOCKS: On-warrant stocks of aluminium in LME-registered warehouses have plunged from more than 861,800 tonnes on Dec. 14 to 536,175 tonnes, the lowest since 2005.

CUTS: Energy usually accounts for around 40% of aluminium smelters’ operating costs, analysts at Bank of America said.

“With around 650,000 tonnes of capacity cut so far, we believe that another 900,000 tonnes of output is at risk of closing down fully or partially over high energy prices,” they said.