Supply concerns, lower stocks drive aluminium to seven-week high

LONDON: Aluminium prices climbed to a seven-week high on Tuesday as concerns over supply from the Gulf coincided with Norsk Hydro’s announcement of reduced feedstock production at its Brazilian plant. Benchmark three-month aluminium on the London Metal Exchange was up 1.7percent at USD3,373 a metric ton in official open-outcry trading, after hitting USD3,384.5, its highest since June 22.

Aluminium extended its gains to a seventh consecutive session after Norsk Hydro said its Alunorte plant in Brazil had cut alumina output to 50percent of capacity due to reduced supply of natural gas. The plant has annual production capacity of 6.3 million tons of alumina. Aluminium is up 6percent so far in August, having broken above its 200-day moving average last week, which now provides support at USD3,219.

The next resistance level is the 100-day moving average at USD3,396. “Aluminium had a lot of resistance at USD3,200. Once it got through there, it was only a matter of time until it started to trend higher,” said a metals trader. “Any bullish headline just acts as a catalyst and adds fuel to the fire.”

Providing further support are worries about supply from Gulf producers and rising oil prices as negotiations between the United States and Iran over a peace deal and the reopening of the Strait of Hormuz hit an impasse.

The US-Iran war has disrupted aluminium shipments from producers in the Middle East, which account for 9percent of global capacity. Meanwhile, available aluminium stocks in LME-registered warehouses are at 244,550 tons, the lowest since April 2025, dominated by Russian-made metal, which many traders avoid.

In other LME metals, copper rose 0.4percent to USD14,215a ton in official activity, having closed on Monday at an all-time high of USD14,160 as outflows to the US ahead of potential US import tariffs reduced availability.

The cash-to-three-month spread on the LME remains in sharp backwardation at USD196 a ton, its deepest since October, signalling tightness for nearby supply.

LME zinc was steady at USD3,739, while lead and tin added 0.1percent to USD1,905 and USD55,800, respectively. Nickel lost 0.6percent to USD16,830.