Aluminium rises as the Middle East conflict fuels supply worries

LONDON: Aluminium rose on Tuesday as traders remained alert to supply risks from the Middle East amid the U.S. and Israeli air war against Iran spilling into neighbouring countries.

Benchmark aluminium on the London Metal Exchange was up 2.1% at $3,260 a metric ton in official open-outcry trading after hitting a one-month high of $3,315.

The Middle East accounts for 8% of global aluminium capacity, and exports its products via the Strait of Hormuz. On Monday, Iran vowed to attack any ship trying to pass through the Strait. Aluminium producers paused second-quarter premium offers to Japanese buyers.

Norsk Hydro was seeking more information after QatarEnergy said it was stopping production of some downstream products in Qatar, including aluminium. QatarEnergy supplies gas to Qatalum, Norsk Hydro’s joint venture with a local company.

Aluminium drifts to one-week high while rising stocks weigh on copper

Signalling worries about the availability of the metal for nearby supply, the spread between the LME cash aluminium contract and the benchmark was last at zero in Tuesday’s volatile session compared with the last week’s discount of $12 a ton.

Available aluminium stocks in the LME-registered warehouses fell to 375,525 tons, lowest level since September, after 45,325 tons of fresh cancellations in Malaysia’s Port Klang, daily LME data showed.

Copper lost1.9% to $12,864in official activity after hitting $12,722, its lowest since February 19, as the U.S. dollar extended gains with the spike in energy prices and no end to hostilities in sight. A selloff in stocks and government bonds deepened, while precious metals were down sharply.

“It’s a new world,” said Ben Davis, head of European metals and mining research at RBC Capital Markets. “It was surprising how muted the reaction was yesterday, but markets are clearly catching up now.”

In other LME metals, tin slumped 7.7% to $49,550 with signsthat Myanmar’s Wa region was taking steps towards gradual restart of mining operations.

Nickel was down 0.2% at $17,120. Indonesia nickel miners association said the government allotted a nickel ore output quota of 260 million tons for 2026. There will be an opportunity to propose revision on the quota, it added.

Zinc fell 0.5% to $3,300 after hitting its one-month low of $3,248, lead lost 0.8% to $1,945.5.