Aluminium neared $2,500 a tonne on Thursday – a level not seen since 2018 – as rising tensions between China, the biggest producer, and Australia, a major supplier of raw materials, added momentum to its rally.
Prices have rocketed almost 25% this year as commodities and equities markets surged and investors anticipate that a crackdown on polluting smelters in China will constrain supply.
Adding impetus was China saying it would “indefinitely” suspend all activity under a China-Australia Strategic Economic Dialogue, deepening a crisis in relations.
Australia is a major producer of bauxite and alumina used to smelt aluminium.
Benchmark aluminium on the London Metal Exchange (LME) was up 1.1% at $2,471.50 a tonne at 0956 GMT after touching $2,476.
The most active aluminium contract on the Shanghai Futures Exchange closed up 2.7% at 19,385 yuan ($2,992.67) a tonne after hitting its highest since January 2010.
Prices are likely to keep rising, said independent analyst Robin Bhar.
“Investors and others have the bit between their teeth,” he said. “If China is stricter on closing polluting production capacity and we get a more balanced market … maybe we can see $3,000 a tonne (on the LME).”