Aluminium prices in London touched their highest levels in over two weeks on Wednesday as traders gauged risks of global supply shortage following reports of potential EU sanctions on Russia, one of the world’s top producers.
Three-month aluminium on the London Metal Exchange was up 1.4% at USD 2,258 per metric ton, as of 0743 GMT, while the most-traded March aluminium contract on the Shanghai Futures Exchange closed up 2% at its highest since Jan. 15 of 19,025 yuan (USD 2,653.38) a ton.
Earlier in the session, LME aluminium touched the highest level since Jan. 8 at USD 2,262 a ton.
The metal used in construction, transport and packaging, rose after Poland and the Baltic states called for the European Union to ban imports of Russian aluminium and liquefied natural gas over Moscow’s invasion of Ukraine.
“If the EU sanctions were applied in isolation, we would view this as primarily an upside risk for regional premia, with limited sustained impact on global market fundamentals and in turn LME price,” Goldman Sachs analysts said in a note.
“However, if this was followed by similar U.S. sanctions and an LME ban, then a broader ex-China tightening effect would generate significant right tail risk to the LME price,” they said.
LME zinc climbed 1.7% to USD 2,561.50 a ton, copper advanced 1% to USD 8,492.50, nickel rose 0.3% to USD 16,360, lead edged 0.4% higher at USD 2,175 and tin climbed 0.8% to USD 26,435.
Nearby supply of LME lead is getting tighter, as implied by the discount of cash contract to the three-month contract shrinking to 88 cents a ton on Tuesday, from a discount of more than USD 40 last month.
SHFE zinc jumped 2.3% to 21,250 yuan a ton, nickel increased 1.3% to 129,480 yuan, copper rose 0.7% to 68,380 yuan, lead was 0.7% higher at 16,665 yuan, and tin advanced 1.1% to 218,880 yuan.
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(USD 1 = 7.1701 yuan)
