Qatar curtailment exacerbates Iran war aluminium fears

OSLO/LONDON, March 3 (Reuters) - The impact of the U.S.-Israeli attacks on Iran on the aluminium sector deepened on Tuesday after QatarEnergy said it was halting production of the metal.

The state-owned company had already suspended production of liquefied natural gas on Monday following Iranian drone attacks on its Ras Laffan complex, sending natural gas prices TFMBMc1 soaring.

In a statement on Tuesday, it said it was also stopping production of some downstream products, including aluminium.

QatarEnergy holds 51% in Qatar Aluminum Manufacturing Co, one of the shareholders in the 648,000-metric-ton-per-year Qatalum smelter alongside Norway's Norsk Hydro NHY.OL.

IMPLICATIONS FOR ALUMINIUM PRODUCTION ARE UNCLEAR

Hydro said QatarEnergy supplied gas to Qatalum, but that the "specific implications for aluminium production at Qatalum are currently unclear." Qatalum did not immediately respond to a request for comment.

Aluminium prices CMAL3 on the London Metal Exchange rose as much as 3.8% to a one-month high at $3,315 a ton, following a 1.7% jump by Monday's close.

Traders said the stoppage raised fears others in the region would also soon stop producing the metal vital for construction, transport and packaging. Gulf Cooperation Council countries accounted for 8% of the world's aluminium supply last year.

"The situation in the Middle East remains fluid but we note the region is both a significant producer and exporter of aluminium by sea and also relies on imports of bauxite and alumina to keep smelters running," Morgan Stanley said in a note.

Kpler's lead metals analyst Ben Ayre put the GCC's average monthly alumina imports at 680,000 tons. Only 61,000 tons of alumina on the water bound for the region's smelters are already in the Gulf, he said. Another 57,000 tons destined for Oman would not need to pass through the Strait of Hormuz, which is effectively closed for shipping.

"There is an additional 377,000 tons en route and we have 160,000 tons lined up to depart Australia later in the month," Ayre said.

Meanwhile, almost 10% of aluminium inventories in the LME warehousing network MALSTX-TOTAL, 45,325 tons, were ordered to be removed from storage in Port Klang, Malaysia, exchange data showed on Tuesday, suggesting traders are looking to cash in on supply shortages.