By: Reuters

Aluminium prices soared to their highest point in more than four years as Middle East supply risks escalated after the U.S. and Iran traded military strikes, traders said.

Benchmark aluminium CMAL3 on the London Metal Exchange was up 0.6% at $3,690 a metric ton at 0916 GMT. Earlier, it hit $3,707.50 to match a level hit on May 26 for its highest point since March 2022.

The Middle East houses 9% of global smelting capacity for aluminium. The closure of the Strait of Hormuz has restricted aluminium exports from the region and limited imports of the raw materials needed to smelt the metal used to manufacture cars, aeroplanes, beer cans and building materials.

Analysts expect a large aluminium market deficit this year, with some floating numbers above 2 million tons.

"Aluminium remains the standout story," Britannia Global Markets said in a note. "The extreme backwardation highlights the severity of the squeeze."

Backwardation refers to the premium for nearby LME aluminium contracts against those along the maturity curve 0#MAL:.

The premium for the cash aluminium contract over a three-month forward surged to 19-year highs above $100 a ton on Friday.

Elsewhere, copper prices are ticking up as markets price in tight markets outside the U.S., which has over the last year sucked in vast amounts of copper due to expectations for tariffs on imports.

The U.S. is expected to decide by late June whether to impose tariffs on copper metal imports.

Total copper stocks in warehouses registered with Comex HG-STX-COMEX at 640,181 short tons or 580,762 metric tons are up more than 550% since U.S. President Donald Trump in February last year ordered an investigation of copper import tariffs.

Expectations of weak mine supply growth have also helped reinforce elevated copper prices.

Supporting industrial metals overall was expanding manufacturing activity in top consumer China for the sixth consecutive month.

Copper CMCU3 was up 1.1% at $13,792 a ton, zinc CMZN3 gained 0.9% to $3,571, lead CMPB3 firmed 0.1% to $2,018, tin CMSN3 advanced 2% to $56,500 and nickel CMNI3 climbed 1.1% to $19,280.

(Reporting by Pratima Desai; Additional reporting by Dylan Duan; Editing by Thomas Derpinghaus)