Aluminium falls on EGA alumina restart, still set for weekly rise

LONDON: Aluminium prices fell sharply on Friday as Emirates Global Aluminium said it had restarted its alumina refinery in the United Arab Emirates after a 3-1/2-month outage, in a further sign that metal production in the Gulf is set to ramp back up.

Benchmark three-month aluminium on the London Metal Exchange was down 1.8percent at USD3,143.50 a metric ton as of 1600 GMT, having dipped as much as 2.1percent earlier in the session.

The metal, used in transport and packaging, was nonetheless on course to end the week up 1.8percent and snap five straight weekly losses driven by an easing of Middle East tensions and optimism over returning supplies. “Broad market sentiment appears to want to sell rallies amid the expectation that Indonesian (aluminium) and the supply recovery from the Gulf will be greater than feared,” broker Marex wrote in a note.

Indonesia is a home to several emerging aluminium smelters, one of which began exporting last month. EGA, the largest aluminium maker in the Middle East, said its Al Taweelah refinery’s output of raw material alumina was expected to ramp up to 50percent of capacity “within days,” with full production potentially restored by the year-end.

However, the prospects for EGA’s alumina and aluminium to flow through the Strait of Hormuz to export markets are uncertain amid renewed tit-for-tat strikes by the US and Iran.

LME aluminium inventories, meanwhile, remain at their lowest since September 2022. The cash LME aluminium contract was trading at a USD2-a-ton premium over the three-month forward, retaining its slight backwardation for a second day in a sign of tighter near-term physical availability.

Elsewhere, copper inched up 0.1percent to USD13,495.50 a ton and was heading for a weekly gain of 1percent. Shanghai Futures Exchange copper stocks plunged 18.3percent from last week to 100,271 tons, the lowest since December.

Lead added 0.2percent to USD1,896 and nickel gained 0.9percent to USD16,735, as sulphur shortages continue to plague top producer Indonesia. Tin dipped 0.3percent to USD53,405 and zinc also fell 0.3percent to USD3,614.50.