On March 4, the London Metal Exchange (LME) aluminium price reflected a 4-year high level, since the COVID in early 2022. On this day, the LME cash bid rose by USD 110.5 per tonne or 3.4 per cent, shifting from USD 3,267 per tonne to USD 3,377.5 per tonne. The cash offer marked a difference of USD 109 per tonne or 3.3 per cent, settling from USD 3,269 per tonne to USD 3,378 per tonne.
The rising aluminium price is owed to the ongoing tension between the US, Israel and Iran, due to which the Strait of Hormuz, the water route for shipping commodities, has been temporarily closed, resulting in worldwide supply disruption.
The regional tension also led to the closure of QatarEnergy’s major LNG plant, which resulted in an overall halt to Qatalum, a joint venture between Qatar’s state-owned aluminium producer and Norsk Hydro, which faced a temporary halt for an estimated timeframe of six to twelve months.
Owing to this, the LME aluminium three-month contract strengthened both the bid and offer, going up by 3.4 per cent, where the bid rose from USD 3,260 per tonne to USD 3,371 per tonne, reflecting a day-on-day increase of USD 111 per tonne. Similarly, the offer inched up from USD 3,260.5 per tonne to USD 3,372 per tonne, showing an increase of USD 111.5 per tonne.
For longer-dated contracts, the current tension resulting to the supply disruption will also be affected, where both the December 2027 bid and offer on March 4 rose by USD 73 per tonne or 2.3 per cent. The bid shifted from USD 3,132 per tonne to USD 3,205 per tonne and the offer rose from USD 3,137 per tonne to USD 3,210 per tonne.
The LME aluminium three-month Asian Reference Price for March 4 was assessed at USD 3,342.5 per tonne from USD 3,251 per tonne, up by USD 91.5 per tonne or 3 per cent.