(March 9): Aluminium hit the highest in almost four years before erasing gains, as escalating hostilities in the Middle East worsened the supply outlook from the region, while copper and other industrial metals fell on falling risk appetite.
The metal rose as much as 2.8% to US$3,544 a tonne in London, the highest since March 2022, then eased to trade about US$100 lower. The cash to three-month aluminium spread closed at US$47.40 a tonne on Friday, also the highest since 2022, in a sign that immediately available supplies are tight.
Aluminium had climbed almost 10% last week as the war curtailed shipments from the Persian Gulf, which accounts for about 9% of global supply. Buyers in the US were rushing to secure alternative cargoes from Asia after at least two major smelters in the Middle East — one in Qatar and another in Bahrain — were forced to suspend deliveries.
Crude oil spiked nearly 30% at one point on Monday as the conflict curbed more production, reflecting deepening worries around the duration of the war and its impact on the global economy. Broader financial markets tumbled as investors avoided risk assets.
A “prolonged war will hurt aluminium supplies further”, said Gao Yin, an analyst at Shuohe Asset Management Co. Many people are buying aluminium and selling other industrial metals in the near term, she added.
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On Sunday, Iran continued attacks on neighbours, while Israel struck fuel depots in Tehran and threatened the Islamic Republic’s power grid. President Donald Trump warned the US would consider targeting areas that weren’t previously aimed at. The strikes will continue “until they surrender or, more likely, completely collapse!” he said in a social media post.
Aluminium on the London Metal Exchange may rise 28% on a yearly basis to US$3,250 a tonne in the first half due to the supply issues, Michelle Leung, an analyst with Bloomberg Intelligence wrote in a note. The global deficit is set to widen to 1.4 million tonnes this year, the most since 2019, she added.
Alumina supplies originally set for Middle East smelters are being diverted to other countries, which has opened an arbitrage window to export into China for profits, Shandong Aize Business Information Consulting Co said in a note on Friday. More alumina, a feedstock in the production of aluminium, is likely to be shipped into the country, it added.
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Meanwhile, Singapore iron ore futures rose as much as 2.3% to US$103.90 a tonne, the highest in nearly five weeks, before trimming some gains. Prices of the steelmaking ingredient were supported by concerns that surging energy costs could upend supply chains.
Aluminium fell 0.6% to US$3,425 a tonne as of 8.14am in London. Copper fell 0.7% to US$12,776 a tonne and nickel dropped 1.2% to US$17,255 a tonne.
Uploaded by Felyx Teoh
