Aluminium prices climbed strongly on Monday as markets reacted to Iranian strikes over the weekend that hit two major aluminium producers in the Middle East.
On the London Metal Exchange, the benchmark three-month aluminium contract was up 3.85% at $3,423 a metric ton as of 0718 GMT. Earlier in the session the contract reached $3,492, its highest level since March 19 and approaching a four-year high of $3,546.50.
In China, the most-active aluminium contract on the Shanghai Futures Exchange closed 3.43% higher at 24,725 yuan a ton, equivalent to $3,578.82. During the session it rose as much as 3.91% to 24,840 yuan, the strongest level since March 19.
Aluminium Bahrain, which operates the world’s largest single-site smelter, said on Sunday it was assessing the damage from the strikes. Emirates Global Aluminium reported its plant sustained "significant damage".
Concerns about supply have intensified since the United States and Israel’s war against Iran began, as Gulf-based aluminium producers - which account for about 9% of global supply - have faced difficulties shipping material through the Strait of Hormuz. Alba has already started shutting smelting lines representing 19% of its capacity earlier this month.
Traders cautioned that severe damage to the facilities could force additional production cuts that may be difficult to reverse in the near term. Analysts at ING Economics warned: "The latest attacks increase the probability of a prolonged disruption scenario, where supply losses could persist even if geopolitical tensions ease, reinforcing upside risks to prices."
The wider metals complex registered gains on Monday. On the London Metal Exchange, copper was the only base metal to slip, down 0.02%. Zinc rose 1.44%, lead gained 0.42%, nickel added 0.75% and tin climbed 1.19%.
On the Shanghai Futures Exchange other base metals also advanced. Copper nudged 0.06% higher, zinc gained 1.23%, lead was up 0.12%, nickel added 0.47% and tin rose 4.20%.
Geopolitical developments continued to influence markets beyond metals. U.S. President Donald Trump repeatedly said the U.S. and Iran are talking to end the war, even as additional U.S. troops arrived in the Middle East and Iran warned it would not accept humiliation. Oil prices also moved higher, with Brent crude set for a record monthly gain of more than 60%.
Market takeaway - The strikes have elevated the risk premium on aluminium and other commodities linked to Gulf production and shipping. Participants are monitoring damage assessments from the affected plants and any further disruptions to flows through the Strait of Hormuz.