METALS-Aluminium edges up, Middle East supply in focus

By Polina Devitt

LONDON, March 18 (Reuters) - Aluminium prices ticked up on Wednesday as an alternative export route to the Strait of Hormuz, secured by Emirates Global Aluminium amid the U.S.-Israeli war on Iran, offered temporary respite to supply jitters.

The benchmark three-month aluminium CMAL3 on the London Metal Exchange rose 0.1% to $3,402 a metric ton by 1702 GMT after hitting $3,336, the lowest since March 10.

"Prices are expected to remain elevated due to the growing supply squeeze caused by the Middle East conflict-driven production disruptions and the pending plunge in inventories," said Bart Melek, head of commodity strategy at TD Securities.

Typically, more than 5 million tons of aluminium are shipped through the Strait of Hormuz each year by smelters in Bahrain, Qatar, Saudi Arabia and the United Arab Emirates, he added. Vast quantities of bauxite and alumina travel the other way to feed the smelters.

In the physical market, the duty-paid premium that aluminium consumers in Europe pay above the LME price EPDc1 rose to $450 a ton this week, its highest since August 2022.

LME copper CMCU3 fell 3% to $12,388 a ton having hit $12,342 earlier in the session, the lowest level since January 9, on rising inventories, a stronger dollar and inflation risks amid the Middle East conflict.

Copper stocks in LME warehouses MCUSTX-TOTAL are at 334,100 tons, their highest since August 2019, with 3,775 tons of inflows to LME-registered warehouses in the U.S., LME daily data showed.

With ample metal available for near-term delivery, the discount of the LME cash copper contract to the three-month contract CMCU0-3 widened to $113.5 a ton on Tuesday, its highest in 13 months. It was last at $105 on Wednesday.

Among other LME metals, zinc CMZN3 dropped 2.8% to $3,135 after touching a two-month low of $3,130, lead CMPB3 eased 0.9% to $1,912, tin CMSN3 lost 3.5% to $45,100, while nickel CMNI3 eased 0.2% to $17,150.