Aluminum prices hit their highest in more than four years on Tuesday, as rising prices for the feedstock alumina added to persistent concerns about a tightening market amid reduced supply from Gulf producers.
Three-month aluminum on the London Metal Exchange rose 0.8 per cent to US$3,680 in official open-outcry trading after hitting US$3,707.5, the highest since March 24, 2022.
The metal’s record high of US$4,073.5 was on March 7, 2022, when markets were grappling with the immediate fallout of Russia’s invasion of Ukraine.
Providing support to aluminum on Tuesday was a 5-per-cent rise in September alumina futures on the Shanghai Futures Exchange, which advanced to their highest since early May owing to worries about supplies of raw material bauxite from Guinea.
Guinea, the world’s top bauxite producer, has been considering introducing export quotas for mining companies as shipping costs climb, squeezing the country’s revenue. Guinea expects to finalize the new policy in June, Bloomberg News reported, citing an official.
These worries added to already reduced supply from producers in the Gulf amid the Iran war, which has kept the premium of the LME aluminum cash contract against the benchmark at US$71 a tonne last week, indicating tightness for immediate supply.
The Middle East conflict has triggered the largest aluminum supply shock in at least 50 years, analysts at Citi said in a note last week, accelerating inventory drawdowns of around three million tonnes this year from already historically low levels and prompting strong futures buying.
In other LME metals, copper fell 0.4 per cent to US$13,610 a tonne in official activity. The global refined copper market was in a surplus of 396,000 tonnes in January-March, according to an industry body.
Zinc rose 1.0 per cent to US$3,577, lead gained 0.2 per cent to US$2,015, tin added 0.5 per cent to US$54,450 and nickel lost 0.8 per cent to US$18,760.
Earlier in the session, LME copper, zinc and tin hit their highest since mid-May, while lead touched the highest since late January.