Aluminum Rises as Middle East War Threatens Supply Disruptions

Article content(Bloomberg) — Aluminum climbed on concerns that critical supply routes for Middle Eastern producers will be disrupted by conflict in a region responsible for a significant chunk of global output.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentPrices for the metal advanced as much as 2.8% in early trading to $3,228 a ton on the London Metal Exchange, before paring gains. The Strait of Hormuz — a trade chokepoint off the coast of Iran — is used by many of the area’s major aluminum producers to ship out metal and bring in raw materials.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentConflict in the Middle East spread over the weekend after the US and Israel attacked Iran, and Tehran retaliated with strikes on multiple countries. The region accounts for about 9% of the world’s aluminum production capacity, according to consultancy AZ China Ltd., and prices have typically been sensitive to spikes in regional tensions.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentPotential disruptions to flows of bauxite or alumina that feed the Middle East’s aluminum smelters present a “very significant risk”, said Li Xuezhi, head of research at Chaos Ternary Futures. Aluminum prices are likely to move higher, he said.Article contentPresident Donald Trump said US forces will continue bombing Iran until his objectives have been achieved, while calling on the Islamic Republic’s military and police to surrender or “face certain death.” Tehran has responded to the US-Israeli attacks with waves of missiles fired at neighboring countries, including Saudi Arabia, the United Arab Emirates and Bahrain — all key producers of aluminum.Article contentAluminum rose 1.2% to $3,178 a ton on the LME as of 10:26 a.m. Shanghai time. Copper fell 0.7% after advancing earlier, while zinc was flat. Iran has become a notable supplier of zinc to China, which helped keep domestic prices three relatively subdued last year, compared with the rest of the world.Article contentArticle contentThe mixed response across base metals markets — and the relatively modest jump for aluminum — likely reflects broader investor fears about the impact of the escalating Iran war on energy prices and the global economy. The dollar rose on Monday, a headwind for commodities priced in the US currency.Article contentThe aluminum market now faces a “two-way macro pull” as events in the Gulf threaten to push up regional premiums in Europe and the US, while risk-off positioning and dollar strength “exert a countervailing drag,” Citigroup Inc. analysts including Wenyu Yao said in a note. Article contentAluminum smelters typically maintain around one to two weeks of alumina inventory, limiting the immediate risks to production, Citi said. Higher premia, elevated freight rates and incremental shipping delays from the Gulf are the most plausible near-term effects, it said.Article contentMeanwhile, iron ore declined 0.2% to $98.15 a ton in Singapore.

The Middle East is a major producer of iron ore pellets, with a 13% global share, according to BMO Global Commodities Research. Chinese steel exports to the region have been rising.Article content—With assistance from Katharine Gemmell.Article contentTrending What's at stake for oil markets as Trump strikes Iran Oil & Gas The (high) opportunity cost of paying off your mortgage early Mortgages Trump Seeks Iran Leadership Transition as Report Points to Talks PMN Business Stocks Decline, Oil Rises as Iran Crisis Unfolds: Markets Wrap PMN Business Feds to invest millions in startup accelerator to boost Canadian defence and dual-use companies Innovation Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. What's at stake for oil markets as Trump strikes Iran Oil & Gas The (high) opportunity cost of paying off your mortgage early Mortgages Trump Seeks Iran Leadership Transition as Report Points to Talks PMN Business Stocks Decline, Oil Rises as Iran Crisis Unfolds: Markets Wrap PMN Business Feds to invest millions in startup accelerator to boost Canadian defence and dual-use companies Innovation