LONDON: Aluminium prices rose to a three-week high on Wednesday on concern about supplies ahead of an announcement from the United States on sanctions against Russia over the death of opposition leader Alexei Navalny.
Three-month aluminium on the London Metal Exchange touched $2,269 a metric ton, hitting its highest since Feb. 1. It traded up 2.5% at $2,246.5 per ton at 1149 GMT.
Prices of the metals used in the power, construction and transport industries broke major resistance at the 21-day, 50-day and 100-day moving averages earlier in the session.
“Aluminium leading the way on base after the US sanction news. Lots of short covering against a backdrop more supportive measures from China,” a metals trader said.
The U.S. will announce a major package of sanctions against Russia on Friday, President Joe Biden said on Tuesday. It will target the country’s defence and industrial bases.
“This could also lead the LME to reopen the debate on whether it should ban deliveries of Russian metal. The market will be now awaiting clarity on how far-reaching any US sanctions might be,” ING commodities strategist Ewa Manthey said in a note.
Russian aluminium accounted for 90% of stocks stored in LME’s warehouses in January, according to the exchange. As some Western consumers have been avoiding Russian aluminium, the high ratio of Russian-origin inventory has challenged the legitimacy of LME prices in the physical market.
Also supporting base metals are top consumer China’s stimulus measures. China announced its biggest cut in the benchmark mortgage rate on Tuesday to prop up the struggling property market.
LME copper also touched its highest in three weeks at $8,574 a metric ton. It last traded at $8,542, up 0.5%.
For other metals, nickel gained 2% to $16,670, zinc was up 0.7% at $2,393.5, lead gained 0.9% to $2,067 and tin rose 0.6% to $26,635.
Limiting the upside for metals prices are a dollar which firmed on Wednesday as traders awaited minutes of the Federal Reserve’s latest policy meeting due later in the day for more clarity on the rate outlook.