Aluminium prices extended gains on Wednesday as supply worries deepened after Norway’s Norsk Hydro announced a controlled shutdown in its aluminium joint venture in Qatar amid a widening war in the Middle East.

The region accounts for around 8% of global aluminium capacity. Supply concerns are materialising as the conflict spreads to neighbouring countries, following the Qatalum shutdown and Iran’s threat to target ships attempting to transit the Strait of Hormuz.

The most-active aluminium contract on the Shanghai Futures Exchange SAFcv1 closed daytime trading 2.31% higher at 24,795 yuan (US$3,585.11) a metric ton.

The benchmark three-month aluminium CMAL3 on the London Metal Exchange rose 1.6% to US$3,303 a ton as of 0700 GMT.

Norsk Hydro announced the Qatalum shutdown on Tuesday after its gas supplier warned of an impending supply halt. The company said it had issued a force majeure notice to customers as the curtailment continues, with the shutdown expected to last until end-March and a full restart potentially taking six to 12 months.

A stronger US dollar continued to cap aluminium’s gains.

Elsewhere, the most-active copper contract in Shanghai SCFcv1 declined 0.73% to 101,660 yuan a ton, and the benchmark copper CMCU3 was up 0.58% at US$13,030 a ton.

Citi analysts warned that the Iran conflict could push copper prices below US$12,000 a ton in the near term, as continued disruption would keep pressure on the macroeconomic backdrop and dent demand for metals.

They added that fading expectations for interest-rate cuts by the Federal Reserve and softer cyclical growth forecasts have also contributed to downward pressure on prices.

Elsewhere on SHFE, zinc SZNcv1 dropped 0.59%, lead SPBcv1 declined 0.38%, tin SSNcv1 plunged 5.17% and nickel SNIcv1 edged 0.12% higher.

Source: Theedgemalaysia