LONDON - Aluminium prices rose on Monday to their highest since 2008 due to increases in costs of energy and raw materials used to make the metal and output cuts by the biggest producer, China.
China's production, already curbed by a government anti-pollution drive, has been further hit by power shortages gripping the country.
Chinese energy futures prices have surged to multi-year and record highs, with India also facing power outages and soaring energy costs, forcing a Dutch aluminium producer and a Spanish steel plant to halt production.
Benchmark aluminium on the London Metal Exchange (LME) was up 1.9% at $3 022.50/t at 11:05 GMT after reaching $3 044, the highest since July 2008.
Prices are up more than 50% so far this year, after a 9% gain in 2020.
"Aluminium should go up," said WisdomTree analyst Nitesh Shah. He said prices around $3 300 to $3 400 were possible by year-end but that demand could slacken if the global economy continues to weaken, derailing the rally.
SUPPLY: Analysts at Macquarie estimate supply disruption will reduce Chinese aluminium output by 1.5-million tonnes this year, leading to a 1-million tonne deficit in the roughly 65-million tonne global market.
NO SHORTAGE: But demand in China is falling, stockpiles are plentiful and prices are likely to fall towards $2 200 in 2022, Timothy Weiner at consultants Harbor Aluminum told an audience gathered in London for LME Week.
ALUMINA: Prices of alumina, a raw material used to make aluminium, have surged on the Comex exchange to a three-year high of $478 a tonne.
CHILE: Bottlenecks in transportation and energy supply are pushing up costs for global miners but this should be temporary, the head of Antofagasta Minerals said.
CHINA: The city of Harbin announced measures to support property developers and their projects, reassuring investors fearing a damaging debt crisis in China's construction sector.
OTHER METALS: LME copper was up 1.2% at $9,476 a tonne, zinc rose 1.3% to $3,191, nickel gained 0.7% to $19,345, lead was 0.8% higher at $2,238 and tin was up 0.3% at $36,265.