Aluminum hit a new high in LME due to increased supply concerns

LME aluminium prices hit a record high on Monday after western countries announced more sanctions on Russia, a major aluminium producer, adding to supply concerns.

17:00 London time (01:00 Beijing time on March 1st)), LME aluminum for three-month delivery rose 0.33%, or $11, to close at $3368.50 a tonne, an intraday high of $3525 a tonne.

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Aluminum trading volume was 30419 lots, almost equal to the volume of LME's other five major metals combined.

Aluminum prices have recently hit record highs, rising more than 11 per cent in February, the biggest monthly increase since April 2018.

Tougher sanctions announced over the weekend include banning some Russian banks from using the Global Banking and Financial Telecommunications Association's (SWIFT) international payment system, and banning the SWIFT system is seen as a "big card" of western sanctions against Russia in response to the crisis in Ukraine.

Traders said this could affect Russia's commodity exports.

"according to the current announcement, there are no clear sanctions against metal flows, but more and more Russian companies are affected, which makes the market uneasy," said a senior commodities strategist at (ING Bank), ING bank.

High energy prices also have an indirect impact on zinc and aluminum. Although oil and gas are not the target of sanctions, metal prices are expected to soar further if Mr Putin retaliates with natural gas. "

Russia accounts for about 6 per cent of the world's aluminium production and about 7 per cent of the world's nickel supply. It is also a major producer of natural gas, which is used to generate electricity, and natural gas is a key component of aluminum production.

Yeap Jun Rong, market strategist at IG in Singapore, said: "Russia seems to put its strategic interests above economic sanctions, so the situation is at risk of further escalation."

Rusal (Rusal) has suspended alumina exports from its Nikolaev refinery near the Ukrainian port of Mykolaiv, consultancy Wood Mackenzie said in a research report on Monday.

Wood Mackenzie analyst Stami Shivkar said: "Nikolaev's alumina is shipped to Russia's Bratsk, Krasnoyarsk and Sayanogorsk smelters, which have a combined annual production capacity of 2.5 million tons.

Nickel for three-month delivery fell 0.32 per cent to $24282 a tonne after rising 3 per cent earlier in the day.

Copper production in Chile, the world's largest copper producer, fell 7.5 per cent in January from a year earlier to 429923 tonnes, according to data released on Monday.