Aluminum prices surged to their highest level in more than four years, driven by fears of production cuts in China, the world's top producer, alongside ongoing supply disruptions in the Middle East.
Price Rally
The industrial metal rose 0.6% to settle at $3,672.50 per metric ton on the London Metal Exchange, marking its highest close since March 7, 2022. Traders are increasingly concerned that Chinese smelters may be forced to reduce output as authorities conduct a nationwide inspection of energy use and emissions across key industries, according to researcher Mysteel Global.
China's Overproduction
Chinese aluminum smelters have been operating beyond capacity to capitalize on a global shortage exacerbated by the conflict in the Middle East. Since the war began in late February, LME prices have jumped significantly due to the effective closure of the Strait of Hormuz, which has disrupted supply from the region.
Now, Chinese authorities are moving to curb this overproduction as inventories swell. A smelter in Baise, Guangxi province, has already cut output of molten aluminum, Mysteel reported, though it did not provide estimates of the volumes affected. The Ministry of Industry and Information Technology stated on May 13 that the steel and oil refining industries would also face scrutiny.
China, already the world's largest aluminum producer, saw its daily output rise to a record 129,000 tons last month, according to official data.
Other Metals Mixed
LME copper fluctuated between gains and losses before settling 0.3% lower at $13,623.50. Investors monitored progress toward a potential deal to end the Middle East war. The red metal reached near-record highs this month amid a wave of bets on metals needed for infrastructure linked to the artificial intelligence boom.
Other base metals showed mixed results, with zinc declining 0.3% while tin rose 1.1%.
