LONDON: Aluminium prices in London hit their highest in more than six weeks on Friday due to supply concerns after a fuel depot blast in major 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 major 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 1.6% at $2,279 per metric ton in official open-outcry trading after hitting its highest since Nov. 6 of $2,295.
“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 supported by buying by Commodity Trade Advisor (CTA) investment funds, which are largely driven by computer programmes, he added.
In top metals consumer China, its Big Five banks announced they would cut interest rates on some deposits from Friday, with markets widely interpreting the move as an attempt to pave the way for more reductions in policy rates to aid the economy.
Meanwhile, some metals shipping routes were at risk as maritime carriers avoided the Red Sea due to vessel attacks carried out by the Yemeni Houthi group in support of Palestinians, 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 stable at $8,593 per ton in official activity, zinc climbed 1.8% to $2,593, lead rose 0.2% to $2,070 and tin was up 0.6% at $25,300. Nickel fell 1.7% to $16,600 after the LME daily data showed arrival of 2,382 tons into the LME-registered warehouses, lifting total stocks to the highest level since August 2022.