METALS-Aluminium firms as focus moves back onto tight supplies
March 10 (Reuters) - Aluminium shrugged off an early dip to trade higher on Tuesday, as investors focused on tight supplies of the metal due to disruption in the war-hit Middle East.
Benchmark three-month aluminium CMAL3 on the London Metal Exchange was up 7% to $3,407.50 per metric ton as of 1700 GMT. It had earlier shed as much as 3.5% after U.S. President Donald Trump on Monday predicted a quick end to the conflict with Iran.
The contract had touched its highest since March 2022 at $3,544 on Monday as concerns mounted over further shutdowns of Gulf smelters, unable to ship through the Strait of Hormuz.
The continued premium of the cash LME contract over the three-month forward CMAL0-3 - last at $20 a ton - shows that fears of shortages remain.
"I'm not sure how much everyone appreciates just how hard it is to start an aluminium smelting facility once it's being shut off," said WisdomTree commodity strategist Nitesh Shah. "It takes a bit of time. And this is happening at a time when aluminium markets are already relatively tight."
"I can't see that aluminium prices should be collapsing very quickly," Shah said, adding that a projected "wafer-thin" aluminium surplus for 2026 was now set to be a deficit.
In Asia, 98,150 tons of aluminium were earmarked for delivery out of LME warehouses in Port Klang, Malaysia MAL-MYPKL-TOT. The volume represents 21.7% of all aluminium currently in the LME warehousing system, which at 452,375 tons is the lowest level since July.
Meanwhile, copper CMCU3 rose 1.6% to $13,157.50 a ton. "Any sign of easing of tension could drive a little bit more optimism around cyclical conditions. And that's why I'd say copper is getting a lift today," Shah said.
China's copper imports fell 16.1% in the first two months of the year.
Zinc CMZN3 climbed 0.7% to $3,351 on rising power prices, while nickel CMNI3 firmed 0.6% to $17,575, lead CMPB3 edged up 0.4% to $1,944.50 and tin CMSN3 was flat at $50,425.
