March 5 saw an easing of the London Metal Exchange (LME) aluminium prices after hitting a 4-year high level at the previous close. Aluminium prices maintained a 3-day streak on the rising graph, which raised concerns in the industry. The ongoing geopolitical tensions in Iran led to the shutdown of the Strait of Hormuz, a primary shipping waterway for global trade, disrupting trade across the world.  

LME cash bid eased to USD 3,298 per tonne on March 5 from USD 3,377.5 per tonne on March 4, recording a difference of 2.35 per cent. The cash offer settled at USD 3,298.5 per tonne, slipping from USD 3,378 per tonne, also down 2.35 per cent day-on-day.

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The LME aluminium three-month contract saw the bid at USD 3,300 per tonne, declining 2.11 per cent from USD 3,371 per tonne. The offer pulled back to USD 3,302 per tonne, dropping 2.08 per cent from USD 3,372 per tonne.

Also read: Strait of Hormuz closed, trade in disruptions, and crude oil price is on rise - what do they all mean for the global aluminium market?

A similar easing trend was noticed in the future contracts. The December 2027 bid as well as offer declined by 1.56 per cent. While the bid shifted to USD 3,155 per tonne from USD 3,205 per tonne, the offer settled at USD 3,160 per tonne from USD 3,210 per tonne.

Thu Lan Nguyen, Head of Commodity Research at Commerzbank addressed the easing of aluminium prices after initial market volatility, stating, “I think markets are stabilising a little bit,” and added, “So, I think that pullback in the aluminium price basically fits into that picture.”

The LME aluminium three-month Asian Reference Price was recorded at USD 3,296 per tonne on March 5 from USD 3,342.5 per tonne on March 4, down by 1.39 per cent.

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On the inventory side, LME aluminium opening stocks dropped further from 461,550 tonnes on March 4 to 461,125 tonnes on March 5, decreasing by slightly 0.09 per cent. Live warrants remained unchanged at 377,100 tonnes as in the previous session. Meanwhile, cancelled warrants fell to 82,025 tonnes from 84,025 tonnes, marking decline of 2.38 per cent.

Only the LME alumina Platts price witnessed a hike on the March 5 session. The price settled at USD 306.3 per tonne, rising by 0.42 per cent from the previous session’s USD 305 per tonne.

While, according to Nguyen, inventories across the world are “still at a relatively comfortable level,” the US stocks are tightening by the day.

Citi analysis has raised the LME aluminium price target from USD 3,400 to USD3,600, with the additional warning of the price, under a bull-case scenario, potentially shooting up to USD 4,000. The market currently stands at a wait-and-see juncture as the Middle East tensions continue to unfold.

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