Aluminium prices touch 4-year high today: Here we decode why
What's the story
Aluminium prices have hit a four-year high, surging by as much as 2% in London. The spike is mainly due to supply shortages triggered by the ongoing conflict in the Middle East. The US military has announced plans to blockade the Strait of Hormuz, a move that could further disrupt shipments and exacerbate these supply issues.
Market reaction
Prices surge amid geopolitical tensions
The failure of US-Iran negotiations in Pakistan over the weekend has unraveled a brief bout of market optimism. This is because most other base metals have remained flat or weakened during this period. The global aluminium market is facing major stress, as indicated by a 37% jump in cash contracts over those for delivery in three months on the London Metal Exchange (LME).
Price fluctuations
Metal prices in London
As of 2:05pm Shanghai time, aluminium on the LME had risen by 1.3% to $3,545.50 a ton. Copper also saw a slight increase of 0.1%, reaching $12,857 per ton while zinc dipped slightly by the same percentage. Iron ore futures in Singapore climbed by 0.8%, showing how different metals are responding to these market changes amid ongoing geopolitical tensions.
Gold market
Gold prices fall too
Gold prices have also been affected by these geopolitical developments. The precious metal fell by as much as 2.2%, dropping below $4,650 an ounce and also erasing last week's gains.
Blockade
US military plans to start the blockade today
The US military plans to start the blockade at 7:30pm IST today, after weekend negotiations with Iran failed. This move has already caused a spike in oil and natural gas prices. President Donald Trump also announced that the US shall intercept any vessel that has paid a toll to Iran for safe passage through Hormuz, further straining global energy supplies.