LME aluminum hits record high as Ukraine invasion fuels supply fears

Feb 24 (Reuters) – Aluminum prices in London hit a record high on Thursday after Moscow’s military actions in Ukraine fueled concerns over reduced supplies from Russia, a major metals producer, and the impact of high electricity prices.

Russian forces fired missiles at several Ukrainian towns and landed troops on its southern coast on Thursday, officials and media said. US President Joe Biden said he would announce new sanctions against Russia on Thursday, in addition to the financial measures imposed this week. Read more

Three-month aluminum on the London Metal Exchange hit a record high of $3,443 a tonne earlier in the session and rose 4.2% to $3,428.5 at 0750 GMT.

“Aluminum and nickel are energy-intensive metals and higher energy prices would push the cost curve further. This increases the risk that more European smelters will suspend production or postpone their restart plans,” said Soni Kumari, analyst at ANZ.

Germany shut down the $11 billion Nord Stream 2 gas pipeline owned by Russian gas giant Gazprom on Tuesday, driving up gas prices in Europe.

LME nickel climbed 3.4% to $25,220 a tonne, after hitting a high since May 2011 at $25,240.

The most-traded April nickel contract on the Shanghai Futures Exchange closed 1.2% higher at 179,540 yuan ($28,425.32) a ton, after hitting a record high of 182,170 yuan.

“We are in a time of war and the markets are nervous about supply disruptions,” said Vijay L Bhambwani, head of research at Mumbai-based Equitymaster, adding that there are possibilities of sanctions against companies. Russian metallurgists.

Russia produces around 6% of the world’s aluminum and 7% of its mined nickel. Sanctions imposed on aluminum producer Rusal in 2018 sent the price of the metal skyrocketing by 35% within days.

FUNDAMENTALS

* LME copper fell 0.1% to $9,856.5 a tonne, lead rose 0.6% to $2,350 and zinc gained 0.8% to $3,599. Tin was up 0.8% at $45,295 a tonne after hitting a record high of $45,300.

* Copper ShFE fell 0.4% to 70,960 yuan a tonne, aluminum edged up 0.3% to 22,950 yuan, zinc fell 1.6% to 24,740 yuan, lead fell 0.1% to 15,540 yuan and tin gained 0.7% to 339,420 yuan.

* Global stocks and U.S. bond yields plunged on Thursday, while prices for the dollar, gold and oil soared.

* China has set a “reasonable” price range for benchmark thermal coal of 5,500 kcal at Qinghuangdao port for medium-long term trading at 570-770 yuan ($86.98 – $121.77) per ton, the country’s state planner said Thursday.

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($1 = 6.3162 Chinese Yuan)

Reporting by Eileen Soreng in Bengaluru; Editing by Uttaresh.V and Sherry Jacob-Phillips

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