LME aluminum rises nearly 5% on Russian supply concerns

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London aluminum prices jumped as much as 4.8% on Monday, as fears of supply disruption resurfaced after Australia banned exports of alumina and aluminum ores to Russia amid mounting sanctions on Moscow for its invasion of Ukraine.

The move will limit Russia’s capacity to produce aluminum, which is a critical export for Russia, the Australian government said.

Russia accounts for about 6% of global supply of aluminum, 10% of nickel and is also a major producer of natural gas used to generate electricity that powers production of metals.

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German aluminum maker Trimet will cut production at its main factory in Essen by half in the coming weeks amid huge costs for the energy-intense production process.

Three-month aluminum on the London Metal Exchange (LME) climbed 4.5% to $3,533 a tonne by 0225 GMT, after hitting a peak since March 10.

The most-traded May aluminum contract on the Shanghai Futures Exchange gained 2.1% to 23,055 yuan ($3,624.37) a tonne, having earlier hit its highest since March 8.

FUNDAMENTALS

* LME copper fell 0.7% to $10,260 a tonne, lead rose 0.4% to $2,261.5, zinc was 0.6% higher at $3,848 and tin was up 0.8% to $42,650.

* ShFE copper rose 0.5% to 73,130 yuan a tonne, lead eased 0.3% to 15,185 yuan, zinc slipped 0.4% to 25,300 yuan and tin climbed 3% to 343,450 yuan. The most-traded August nickel contract fell 1.1% to 205,580 yuan a tonne.

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* The LME will raise its daily price limit for nickel trading to 15% from 12% effective Monday, it said a notice.

* Barrick Gold has ended a long-running dispute with Pakistan and will now start to develop one of the world’s biggest gold and copper mining projects under an agreement signed on Sunday.

* Southern Copper Corp said on Saturday that it was close to finalizing a deal with a group of communities to lift a protest that had led its Cuajone mine to suspend operations, pending the ratification of the agreement by local community assemblies.

* Nyrstar’s Auby zinc operations in northern France will resume production at reduced capacity over coming weeks after being placed on maintenance in January in response to high power prices.

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* Top metals consumer China kept its benchmark interest rate for corporate and household lending unchanged on Monday, as expected, although analysts say the case for monetary stimulus is building amid mounting external risks to an already slowing economy.

* Two of the Federal Reserve’s most hawkish policymakers on Friday said the central bank needs to take more aggressive steps to combat inflation.

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MARKETS NEWS

* Asian share markets started the week in a cautious mood as investors clung to hopes for an eventual peace deal in Ukraine, but the fighting raged on with no sign of stopping.

DATA/EVENTS (GMT)

0700 Germany Producer Prices YY, MM Feb ($1 = 6.3611 Chinese yuan) (Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V)