Aluminum futures rose more than 2% due to worries about tighter supply.

(LME) aluminum prices on the London Metal Exchange rose more than 2% on Wednesday, as high electricity prices, especially in Europe, reinforced expectations of a large supply gap and falling inventories.

Aluminium for three-month delivery rose 2.29 per cent to $2904 a tonne, its highest level since October 25th. Aluminium prices have risen more than 10 per cent since November 5.

"there is no quick and permanent solution to the power crisis in Europe," said an analyst at ING. Even if prices fall, it does not mean that the risk is dissipating. "

"European aluminium producers trying to negotiate with power suppliers will find it difficult to get competitive long-term agreements."

At current prices, electricity accounts for about 50% of the cost of smelting aluminum.

Electricity prices in Europe rose on Wednesday as wind power supplies in Germany are shrinking day by day and demand for electricity in France will increase as temperatures drop.

Aluminium stocks in LME-approved warehouses, at 926800 tonnes, have fallen more than 50 per cent since mid-March.

The proportion of warehouse receipts cancelled is 34 per cent, indicating that more aluminum will leave the LME warehouse in the coming days.

Consumers who buy aluminium on the spot market have to pay the benchmark LME price plus a premium.

Supply in Europe is tight, as can be seen from the tariff premium of $390 a tonne, which has risen by 34% since December 1.

Analysts at ING estimate that 400000-500000 tonnes of European aluminium production capacity has been shut down.

Europe accounts for about 13 per cent of global aluminium consumption, which is expected to be about 70 million tonnes this year.

The aluminium market is also watching China, the largest producer, where a ban on Indonesian coal exports has pushed up coal prices.

China and India are also major producers of aluminum and are the main destinations for Indonesian coal.

For other metals, copper for delivery in three months fell 0.1% to $9755 a tonne.

Zinc for the three-month period was virtually unchanged at US $3603 per ton.

Three-month lead rose 0.4% to $2307 a tonne.

Tin for three-month delivery fell 0.2% to US $39125 per ton.

Nickel for three-month delivery fell 1.9% to $20730 a tonne.