Aluminium prices hit 11-week high on supply jitters

London — Aluminium prices in London hit their highest in more than eleven weeks on Friday due to supply concerns after a fuel depot blast in big raw material producer Guinea, a weaker dollar and technical buying.

Chinese alumina futures surged to record highs on Friday as the blast at an oil terminal in big bauxite supplier Guinea sparked fears of a shortage of the feed material for alumina, intermediary product for aluminium.

Three-month aluminium on the London Metal Exchange was up 3% at $2,311.5 per tonne by 2.04pm GMT, its highest since October 3.

“Guinean depot blasts resulting in it looking more like a war zone raise the potential for bauxite supply disruptions to Chinese smelters with their domestic supplies constrained by winter there,” said Alastair Munro, strategist at broker Marex.

The aluminium price gains were also driven by buying by Commodity Trade Advisor (CTA) investment funds, which are largely driven by computer programmes, he added.

The US dollar fell, making dollar-priced metals more attractive for buyers using other currencies, after data showed that US inflation slowed further in November, which could cement financial market expectations for an interest-rate cut next March.

Meanwhile, some metals shipping routes were at risk as maritime carriers avoided the Red Sea due to vessel attacks, causing disruptions in traffic through the Suez Canal, which handles about 12% of global trade.

“The Middle East is a big shipper of refined aluminium. Shipments are likely to get delayed as the vessels usually sail down from the Suez Canal to the Persian gulf to pick up metals shipments,” said a metals trader.

LME copper was up 0.3% to $8,623.5 per tonne, lead rose 0.6% to $2,079 and tin fell 0.2% to $25,100. Zinc climbed 2.4% to $2,608 after hitting highest since November 16 of $2,613 on the Red Sea route risks.

Nickel fell 1.2% to $16,690 after the LME daily data showed arrival of 2,382 tonne into the LME-registered warehouses, lifting total stocks to the highest level since August 2022.

Reuters