Baise Shutdown Sends Aluminium Prices Soaring

Aluminium surged on Tuesday to a 14-year peak on stretched global supplies, particularly after China placed the city of Baise -- a key producer of the metal -- in Covid lockdown.

The market also remains propelled by fears of a conflict between producer Russia and Ukraine, while rocketing energy prices have weighed on European output, according to analysts.

The metal used in everyday items jumped to US$3,236 per tonne in afternoon trade on the London Metal Exchange, reaching a level last seen in 2008.

The market later pulled back somewhat to US$3,223, which was some distance from the record pinnacle of US$3,380.15 struck in July 11 of that year.

"We think the price rise is first and foremost due to supply concerns," Commerzbank analyst Daniel Briesemann told AFP.

"In Europe, several hundred thousand tonnes of production have been curtailed because of the high energy costs.

"In China, another city of several million inhabitants was placed in quarantine on the weekend after new Covid cases were detected there."

The city of Baise, in southwestern China, had an aluminium production capacity of 1.7 million tonnes per year, according to the analyst.

"It is feared that the city's lockdown will hamper the transport of aluminium, thereby further restricting supply," he added.

Aluminium faces the prospect of another large production deficit in the current year as demand continues to outstrip supplies as the world economy recovers from the pandemic.

City Index analyst Fiona Cincotta added that simmering Russia-Ukraine geopolitical tensions were fuelling gains across commodities.

"Russia-Ukraine geopolitical tensions have not just boosted oil and gas prices, but metal prices as well," she said. (AFP)