(April 13): Aluminium jumped to a four-year high in London, as US President Donald Trump’s blockade of Iranian ports threatened more disruptions to shipments from the Persian Gulf.
The lightweight metal rose as much as 2.3% on the London Metal Exchange, reigniting a rally driven by supply shortages due to the Middle East war. The US military said it would implement the blockade, which applies to all vessels entering or departing Iranian ports or coastal areas, at 10am New York time on Monday.
Spot aluminium contracts also rallied further above futures, with the spread on cash contracts over those for delivery in three months jumping as much as 43% from Friday to reach
US$95.50 a ton — the highest since 2007. A premium for spot contracts is known as backwardation, and it signals a growing call on immediate deliveries as buyers hunt for alternative sources of the metal.
The Middle East accounts for about 9% of global aluminium output. Emirates Global Aluminium PJSC, the region’s top producer, has invoked force majeure clauses on at least some deliveries after one of its smelters was put out of action by an Iranian attack earlier this month. So far this year, futures have surged by nearly 19%.
Other base metals were mixed on Monday, as the failure of US-Iran negotiations in Pakistan at the weekend unravelled a brief bout of market optimism. Metals are broadly at risk from weaker demand as soaring energy prices hurt the global economy, although aluminium has gained due to the supply crunch arising from the war.
See also: UK not supporting Trump’s planned Hormuz Strait blockade, Starmer says
Still, elevated prices are curbing demand in China as inventories in the top metal consuming country have risen to the highest since 2020.
“Shanghai aluminium will likely start to price in the reality of weak Chinese demand going forward,” said Chen Jingmin, an analyst at Zijin Tianfeng Futures Co. Weak China fundamentals will cap the upside in London aluminium, she said.
Aluminium climbed 2.1% to US$3,571 a ton on the LME as of 11.29am local time. The metal closed up 0.6% at 24,760 yuan a ton on the Shanghai Futures Exchange. Copper was little changed at US$12,865, while nickel climbed 2.3%. Iron ore futures rose 1.2% in Singapore.
Uploaded by Evelyn Chan
