(Bloomberg) — Aluminum rose to near the strongest level since 2008 as traders assessed the risk of geopolitical tension in Ukraine and the persistent pressure of soaring energy costs on global supplies.
High-level diplomacy continues in a bid to defuse the situation around Ukraine after western officials voiced reservations about Russian announcements that some of its forces are being drawn down. U.S. President Joe Biden will talk with German Chancellor Olaf Scholz later Wednesday ahead of an emergency summit of European leaders on Ukraine the next day. Group of Seven foreign ministers will then meet in person in Munich on Saturday. The Kremlin has consistently denied it plans an attack.
Aluminum has led gains in base metals this year with an advance of 15%, as rising fuel costs and environmental curbs snarl supply in Europe and China. Stockpiles held by the London Metal Exchange shrank again on Wednesday, alongside most other metals. Copper inventories rose 7.6% from the lowest since 2005, signaling some relief for the incredibly tight market.
In China, the biggest producer and consumer of aluminum, prices are supported by tight supply because of pandemic-driven lockdowns and constraints during the Beijing Winter Olympics, Jinrui Futures Co. wrote in a note.
Separately, China’s inflation slowed in January, giving the central bank more room to ease before a key political leadership meeting later this year. The outlook for a further relaxation of monetary policy is supportive for metals.
Aluminum rose 1.4% to $3,252.5 a ton on the LME at 4:22 p.m. local time. The metal reached $3,333 in intraday trading last week, the highest price since a record of $3,380.15 was touched in 2008. Most other main LME metals gained, while copper fluctuated.
