LONDON — Aluminum prices rose to their highest since 2008 on Monday as traders worried about increases in the cost of energy and raw materials used to make the metal and output cuts by leading producer China.
Having already had its aluminum output curbed by a government anti-pollution drive, Chinese production has been further hit by power shortages gripping the country.
India is also facing power outages while soaring energy costs have forced a Dutch aluminum producer and a Spanish steel plant to halt production.
Benchmark aluminum on the London Metal Exchange (LME) was up 3.1% at $3,057 a tonne at 1605 GMT after touching $3,072.50, its highest since July 2008.
Prices are up more than 50% this year after a 9% gain in 2020.
“Aluminum should go up,” said WisdomTree analyst Nitesh Shah. He said prices of $3,300 to $3,400 are possible by the end of the year, though demand could slacken and derail the rally if the global economy continues to weaken.
LME WEEK: Metals consumers, producers, traders and brokers have gathered in London for the annual LME Week gathering.
SUPPLY: Analysts at Macquarie estimate supply disruption will reduce Chinese aluminum output by 1.5 million tonnes this year, leading to a 1 million tonne deficit in the roughly 65 million tonne global market.
NO SHORTAGE: Demand in China is falling, stockpiles are plentiful and prices are likely to fall towards $2,200 in 2022, Timothy Weiner at consultants Harbor Aluminum told an audience gathered in London for LME Week.
ALUMINA: Prices of alumina, a raw material used to make aluminum, have surged on the Comex exchange to a three-year high of $478 a tonne.
COPPER PREMIUMS: Chile’s Codelco is offering to sell copper to European buyers at a premium of $128 a tonne in 2022, the highest since 2015, sources said.
Codelco’s chairman told Reuters the company will produce 2-3% more copper this year than it had previously expected.
OTHER METALS: LME copper was up 1.8% at $9,572 a tonne, zinc rose 2.2% to $3,221.50, lead was 0.4% up at $2,229, tin gained 0.6% to $36,375 and Nickel fell 0.7% to $19,095.
(Reporting by Peter Hobson Additional reporting by Mai Nguyen in Hanoi Editing by Aditya Soni and David Goodman)