Aluminium rebounds on supply concerns amid US-Iran standoff

Aluminium prices bounced back on Friday on fears of supply shortages as the standoff between the U.S. and Iran continued, constricting shipments from the Gulf region, home to large smelters. Iran said on Thursday it would respond with "long and painful strikes" on U.S. positions if Washington renewed attacks. Benchmark three-month aluminium on the London Metal Exchange rose 1.4% to $3,522 a metric ton in official open-outcry trading, snapping five sessions of losses. The metal used in construction, transport and packaging hit $3,672 a ton on April 16, its highest in four years, after disruptions to operations in the Gulf, which account for about 9% of global production. However, prices lost steam after a truce halted attacks. "It's the threat of supply side destruction from a prolonged war, given that the facilities in Qatar and Bahrain won't open up anytime soon," said Nitesh Shah, commodity strategist at WisdomTree. "There's indications of escalation, then de-escalation, and you don't really know where you are at any point in the day. It keeps things pretty choppy on prices." Emirates Global Aluminium said fully restoring primary aluminium production at its Al Taweelah smelter that was hit by an Iranian attack could take up to a year. The premium of the LME cash contract to the three-month future rose 7% to $60 a ton on Friday, having more than doubled since April 17, indicating worries about short-term supply. Trading activity was muted, with the Shanghai Futures Exchange closed until Wednesday for the Labour Day holiday. LME nickel fell 0.5% in official activity to $19,380 a ton after touching a near two-year peak of $19,645 earlier in the session on reduced supplies from top producer Indonesia. "Positioning adjustment in nickel has been remarkable, with funds switching from being net short to net long," Bank of America analyst Michael Widmer said in a note. "All in, we see limited downside to nickel." LME three-month copper dipped 0.2% to $12,965 a ton, zinc slipped 0.6% to $3,342, lead was little changed at $1,955 and tin gained 0.2% to $49,300.