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Aluminium 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 aluminium on the London Metal Exchange rose 0.8% to $3,680in official open-outcry trading after hitting $3,707.5, the highest since March 24, 2022.
The metal's record high of $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 aluminium on Tuesday was a 5% rise in September alumina futures on the Shanghai Futures Exchange , which advanced to their highest since early May due 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 finalise 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 aluminium cash contract against the benchmark at $71 a ton last week, indicating tightness for immediate supply.
The Middle East conflict has triggered the largest aluminium supply shock in at least 50 years, analysts at Citi said in a note last week, accelerating inventory drawdowns of around 3 million tons this year from already historically low levels and prompting strong futures buying.
In other LME metals, copper fell 0.4% to $13,610 a ton in official activity. The global refined copper market was in a surplus of 396,000 tons in January-March, according to an industry body.
Zinc rose 1.0% to $3,577, lead gained 0.2% to $2,015, tin added 0.5% to $54,450 and nickel lost 0.8% to $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.
(Reporting by Polina Devitt; Editing by Mrigank Dhaniwala)
