METALS-Aluminium streaks to record on fears logistics issues will hit supply


By Eric Onstad

LONDON, March 2 (Reuters) - Aluminium prices bolted to a fresh record peak on Wednesday as investors worried that logistics difficulties would block metals supplies due to tough sanctions on major producer Russia.

Three-month aluminium on the London Metal Exchange CMAL3 surged to a record of $3,552 a tonne before paring gains to trade at $3,532 by 1100 GMT, up 1.6%.

Aluminium has soared by 37% over the past 2-1/2 months, initially on weaker output due to power issues, and recently has hit successive record highs after Russia's invasion of Ukraine.

"We're now seeing the second round effects from the sanctions," said analyst Daniel Briesemann at Commerzbank in Frankfurt.

"Logistics issues will get even worse and supply problems are on the cards right now."

Briesemann said he was in the midst of upgrading his metals forecasts and added that he would not be surprised to see aluminium touch $4,000 a tonne.

Sanctions by Western nations have prompted the world's three biggest container lines to suspend cargo shipments to and from Russia at a time when aluminium inventories are low.

Stocks of aluminium in LME-registered warehouses MALSTX-TOTAL have more than halved over the past 12 months to 809,750 tonnes versus nearly 2 million tonnes in March last year.

Russia produces about 6% of the world's aluminium and accounts for about 7% of global nickel mine supplies. It is also a major producer of natural gas used to generate electricity.

LME nickel CMNI3 rose 1.6% to $25,510 a tonne, hovering close to a more than 10-year high touched last week.

* LME zinc CMZN3 was the biggest gainer, advancing 3.5% to $3,878, the highest since October.

"The ever rising power prices are pushing zinc prices up because many market players believe that more zinc producers will cut production," Briesemann said.

* LME copper CMCU3 added 1% to $10,164 a tonne, lead CMPB3 gained 0.8% to $2,428.50 while tin CMSN3 eased 0.2% to $45,700.

* The LME said sanctions announced by the European Union on Feb. 28 against Russian tycoon and metals magnate Alisher Usmanov do not impact any of the LME's listed brands.

* For the top stories in metals and other news, click TOP/MTL or MET/L

(Reporting by Eric Onstad; Editing by Aditya Soni)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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