Aluminium prices climbed to their highest levels in almost 20 days, with three-month aluminium on the London Metal Exchange (LME) rising 0.5% to $2,646 per metric ton. Earlier in the session, it touched $2,684, the highest price since October 3. This surge was primarily driven by a shortage of alumina, a critical raw material for aluminium production, prompting systematic fund buying.
Alumina prices have rallied sharply, rising by 17% in China this month due to supply chain disruptions in key alumina-producing countries such as Australia and Guinea. This shortage has led to a spike in the cost of aluminium production, forcing commodity trading advisors (CTAs), who primarily use computer programs, to buy more aluminium futures.
The most traded front-month alumina contract on the Shanghai Futures Exchange also hit a record high of 5,003 yuan, reflecting the raw material’s soaring prices.
However, despite rising input costs, questions linger about the overall demand for aluminium, particularly in key industries like automotive and packaging. While large position holders in the LME market may spur price volatility, broader market pressure from the rising U.S. dollar has made dollar-priced metals more expensive for foreign buyers.
Other base metals like copper, nickel, and zinc saw declines in prices as market volatility continued.
