johannesburg : Aluminum prices hit a record high on Thursday as Moscow’s invasion of Ukraine sparked fears of sanctions that could cut supplies from major producer Russia and disrupt energy supplies needed to produce the metal .
Moscow on Thursday launched an all-out attack on Ukraine by land, air and sea, the biggest attack by one state against another in Europe since World War II and reaffirming the West’s worst fears.
Russia is a major producer of gas used to generate electricity, a major component of aluminum production.
Escalating tensions and cutting production in Europe have pushed up gas prices, leaving consumers scrambling for the safer metal.
Three-month aluminum traded a record high of $3,449 a tonne on the London Metal Exchange, and was up 4.3% to $3,437 as of 11:10 GMT.
“Russia is one of the largest aluminum producers and most of its materials go to Europe. Wider sanctions could tighten supply even further,” said Amelia Fu, head of commodity market strategy at Bank of China International.
“There is concern that the impact of sanctions on Russia could feed higher energy prices and increase production costs for aluminum and other base metals.”
The reduction in aluminum can be seen in the fee-paying physical premium that consumers pay over and above the LME price, which is at a record high of $464 per tonne in Europe and $795 per tonne in the United States.
Inventory of aluminum in LME-registered warehouses is also running low, at 824,150 tonnes, compared to about 1.3 million a year ago.
Russia produces about 6% of the world’s aluminum and accounts for about 10% of the global nickel supply.
The benchmark price of nickel rose 3.4% to $25,220 a tonne from $25,610 a tonne earlier, the highest since May 2011.
Lack of stock in LME godowns also pushed up nickel prices.
The premium for cash on the three-month nickel contract closed at $491 a tonne on Wednesday, up from close to $645 a tonne on Tuesday, the highest since 2007.
Among other metals, copper rose 1.2% to $9,985 a tonne, zinc rose 2.1% to $3,646, lead rose 1.8% to $2,377 while tin rose 0.8% to $45,300 a tonne, having touched a record high of $45,380. (Reporting by Zandi Shabalala; Editing by Pratima Desai and Krishna Chandra Eluri)
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