Aluminium outperforms copper on energy cost concerns amid US-Iran tensions
SINGAPORE: Aluminium prices outperformed copper on Monday, with the most-traded contracts on the London and Shanghai exchanges surging, as US strikes on Iranian military sites drove up energy prices — a key cost factor for the energy-intensive metal.
The LME three-month aluminium contract rose as much as 3.3% to $2,634.5 per metric ton, before easing to $2,580.50, up 1.22%, by 0101 GMT.
Meanwhile, the SHFE most-traded aluminium contract was up 0.54% at 20,525 yuan ($2,859.23) a ton. In comparison, LME copper gained 0.16% to $9,648.5, and SHFE copper was up 0.31% at 78,420 yuan.
'Aluminium is more energy-price sensitive, so it has reacted more strongly to oil prices, and now the key is whether Iran will shut down the Strait of Hormuz,' a Beijing-based metals analyst from a futures company said, requesting anonymity.
LME official prices
The Strait of Hormuz is crucial for bauxite and alumina shipments in the Middle East, and power accounts for 40% of the total cost in aluminium smelting, he said.
US President Donald Trump on Sunday raised the question of regime change in Iran following US strikes against key military sites over the weekend, as senior officials in his administration warned Tehran against retaliation.
Brent crude futures were up 2.44% at $78.89 a barrel, as of 1122 GMT, the highest since January.
LME zinc contract gained 0.5% to $2,643 a ton, lead inched up 0.1% to $1,994.5, and tin dipped 0.1% to $32,650.
SHFE tin gained 1.2% to 263,950 yuan a ton, lead gained 0.4% to 16,925 yuan, and zinc went up 0.3% to 21,980 yuan.
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