Aluminium up as focus shifts back to shortages, sliding stocks

By Pratima Desai

Aluminium prices rose on Monday as focus returned to forecasts of shortages created by disruptions to supplies from the Middle East and dwindling stocks.

Benchmark aluminium LME:AH1! on the London Metal Exchange traded 0.7% higher at $3,112 a metric ton in official rings. It hit $3,040, the lowest since February 19, as peace talks between the United States and Iran fuelled optimism for a resumption of supplies from the Middle East — housing 9% of global aluminium smelting capacity.

But even if shipments through the Strait of Hormuz restart, the market is still likely to see a deficit this year.

Analysts at Macquarie expect Middle East production to fall to 4.44 million tons this year, down 35% from last year. They expect to see the aluminium market deficit at 930,000 tons this year.

Stocks of aluminium in LME-approved warehouses (MALSTX-TOTAL) at 295,550 tons are down more than 40% since late January and at their lowest since September 2022.

Cancelled warrants or metal earmarked for delivery at 16% show another 48,950 tons are due to leave the LME system.

Elsewhere, the market is still waiting for the outcome of the review into the possibility of tariffs on U.S. imports of copper. Traders had expected a decision at the end of June.

"The June 30 deadline was actually for the Commerce Secretary to provide an update to the President, rather than for a Presidential decision, so we remain in wait and see mode," Macquarie said in a note.

Traders and producers expecting tariffs on imports have been shipping metal to the United States since President Donald Trump ordered a national security probe in February last year.

Copper stocks (HG-STX-COMEX) in warehouses registered with Comex at 668,691 short tons or 606,626 metric tons have climbed nearly 600% since then.

Much of that stock has come from LME warehouses (MCUSTX-TOTAL).

LME copper LME:CA1! was little changed at $13,368 a ton, zinc COMEX:ZNC1! rose 1.1% to $3,580, lead MCX:LEAD1! slipped 0.2% to $1,887, tin MYX:FTIN1! advanced 0.7% to $53,000 and nickel MCX:NICKEL1! fell 1.1% to $16,240.