Metals: Aluminium hits four-year high on renewed Middle East supply risks
METALS-Aluminium hits four-year high on renewed Middle East supply risks Updates with official prices
By Pratima Desai
LONDON, June 1 (Reuters) - Aluminium prices soared to their highest level in more than four years on Monday as tensions in the Middle East intensified, reinforcing worries about shortages of the metal, traders said.
Iran is halting indirect negotiations with the U.S. after Israel ordered troops to push deeper into Lebanon to battle the Tehran-backed Hezbollah group, Iranian news agency Tasnim said.
Benchmark aluminium CMAL3 on the London Metal Exchange was up 1.5% at $3,721 a metric ton at 1604 GMT after earlier touching $3,724, its highest price since March 2022.
The Middle East houses 9% of global smelting capacity for aluminium. The closure of the Strait of Hormuz has restricted aluminium exports from the region and limited imports of the raw materials needed to smelt the metal used to manufacture cars, aeroplanes, beverage cans and building materials.
Analysts expect a large aluminium market deficit this year, with some floating numbers above 2 million tons.
"Aluminium remains the standout story," Britannia Global Markets said in a note. "The extreme backwardation highlights the severity of the squeeze."
Backwardation refers to the premium for nearby LME aluminium contracts against those along the maturity curve 0#MAL:.
The premium for the cash aluminium contract over a three-month forward surged to 19-year highs above $100 a ton on Friday.
Copper prices are also ticking up as markets price in tight markets outside the U.S., which has over the last year sucked in vast amounts of the metal due to expectations for tariffs on imports.
The U.S. is expected to decide by late June whether to impose tariffs on copper metal imports.
Total copper stocks in warehouses registered with Comex HG-STX-COMEX stood at 640,181 short tons, or 580,762 metric tons, up more than 550% since U.S. President Donald Trump in February last year ordered an investigation of copper import tariffs.
Expectations of weak mine supply growth have also helped reinforce elevated copper prices.
Data showing that manufacturing activity in top consumer China expanded for the sixth consecutive month also supported industrial metals overall.
Copper CMCU3 was up 1.3% at $13,816 a ton, zinc CMZN3 gained 0.9% to $3,573, lead CMPB3 slipped 0.3% to $2,010, tin CMSN3 advanced 2.4% to $56,740 and nickel CMNI3 climbed 0.9% to $19,235.
(Reporting by Pratima Desai; Additional reporting by Dylan Duan; Editing by Thomas Derpinghaus, Shailesh Kuber and Paul Simao)