ALUMINIUM prices jumped as conflict in the Middle East raised fears over disruption to a critical shipping route used by producers responsible for nearly a tenth of global output, said Bloomberg News on Monday.
The metal rose as much as 2.9% to $3,231.50 a ton on the London Metal Exchange after the US and Israel attacked Iran over the weekend, prompting Tehran to retaliate with missile strikes on several neighbouring countries, including Saudi Arabia, the United Arab Emirates and Bahrain — all significant aluminium producers.
The Strait of Hormuz, the trade chokepoint off Iran’s coast, is the primary export route for regional producers and a key conduit for raw material imports, said the newswire. The Middle East accounts for roughly 9% of global aluminium production capacity, according to consultancy AZ China, it added.
Li Xuezhi, head of research at Chaos Ternary Futures, described potential disruptions to the bauxite and alumina supplies feeding regional smelters as a “very significant risk”, predicting further price gains.
Citigroup analysts warned that the crisis was creating a “two-way macro pull”, with Gulf supply threats pushing up regional premiums in Europe and the US, while risk-off sentiment and a stronger dollar were acting as a counterweight. Aluminium smelters typically hold one to two weeks of alumina stocks, limiting immediate production risks, Citi added.
Iran has around 790,000 tons of annual smelting capacity. AZ China estimated that between 50,000 and 80,000 tons had already been idled as industries took precautions.
Copper gained 0.3% and zinc rose 0.9%, while iron ore climbed 0.7% to $99 a ton in Singapore. The dollar strengthened, a headwind for dollar-denominated commodities, said Bloomberg News.
