Aluminium prices rose sharply on Monday as market participants braced for a deeper supply shock after Iranian strikes over the weekend hit two of the biggest producers of the metal in the Middle East.
Benchmark three-month aluminium on the London Metal Exchange was up 3.85% at $3,423 a metric ton, as of 0718 GMT. Earlier in the session, it hit its highest since March 19 at $3,492, close to a four-year peak of $3,546.50.
The most-active aluminium contract on the Shanghai Futures Exchange closed 3.43% higher at 24,725 yuan ($3,578.82) a ton, after rising as much as 3.91% earlier in the day to 24,840 yuan, the highest since March 19.
Aluminium Bahrain (ALBH.BH), which runs the world's largest single-site smelter, said on Sunday that it was assessing the damage from the Iranian strikes, while Emirates Global Aluminium said its plant sustained "significant damage".
Fears of aluminium supply disruption have grown since the United States and Israel's war against Iran began because aluminium producers in the Gulf, which accounts for about 9% of global supply, have been unable to ship material through the Strait of Hormuz.
Alba has already started shutting smelting lines representing 19% of its capacity earlier this month. Serious damage to the plants could lead to further production cuts that could be difficult to quickly recover from, traders said.
"The latest attacks increase the probability of a prolonged disruption scenario, where supply losses could persist even if geopolitical tensions ease, reinforcing upside risks to prices," analysts at ING Economics warned.
Elsewhere, base metals posted cross-complex gains, as U.S. President Donald Trump repeatedly said the U.S. and Iran are talking to end the war, though more U.S. troops arrived in the Middle East and the Iran side warned it would not accept humiliation.
Oil prices rose, with Brent crude set for a record monthly gain of more than 60%.
On the LME, copper was the only loser, dipping 0.02%. Zinc rose 1.44%, lead gained 0.42%, nickel added 0.75% and tin climbed 1.19%.
Among other base metals on the SHFE, copper nudged 0.06% higher, zinc gained 1.23%, lead was up 0.12%, nickel added 0.47% and tin rose 4.20%.
($1 = 6.9087 Chinese yuan)
