London — Aluminium prices surged to their highest levels in over eleven weeks on Friday, fueled by a series of factors ranging from supply concerns following a fuel depot blast in Guinea to a weaker US dollar and technical buying.

The blast at a key oil terminal in Guinea, a major bauxite supplier, raised fears of a shortage of feed material for alumina, the intermediary product essential in aluminium production. Chinese alumina futures reached record highs as concerns grew over potential disruptions to bauxite supply, particularly to Chinese smelters whose domestic supplies are already constrained by winter conditions.

As a result, three-month aluminium on the London Metal Exchange rose by 3% to $2,311.5 per tonne by 2.04pm GMT, marking its highest level since October 3. Alastair Munro, a strategist at broker Marex, noted, “Guinean depot blasts resulting in it looking more like a war zone raise the potential for bauxite supply disruptions to Chinese smelters.”

Adding to the upward pressure on aluminium prices, Commodity Trade Advisor (CTA) investment funds engaged in technical buying, largely driven by computer programs. The boost in demand from these funds further contributed to the market’s bullish momentum.

The weakening of the US dollar also played a role in the surge, as dollar-priced metals became more attractive for buyers using other currencies. This decline followed data revealing a slowdown in US inflation in November, heightening expectations of an interest-rate cut in March 2023.

Geopolitical factors introduced additional complexity to the market, with disruptions in maritime routes due to vessel attacks in the Red Sea. Maritime carriers began avoiding the Red Sea, causing traffic disruptions through the Suez Canal, which handles approximately 12% of global trade. A metals trader commented, “The Middle East is a big shipper of refined aluminium. Shipments are likely to get delayed as the vessels usually sail down from the Suez Canal to the Persian Gulf to pick up metals shipments.”

In the broader metal market, LME copper saw a 0.3% increase to $8,623.5 per tonne, lead rose 0.6% to $2,079, and tin fell 0.2% to $25,100. Zinc experienced a notable climb of 2.4% to $2,608 after reaching its highest level since November 16, hitting $2,613, attributed to the risks associated with the Red Sea route. Nickel, however, faced a 1.2% decline to $16,690 following data indicating the arrival of 2,382 tonnes into LME-registered warehouses, pushing total stocks to their highest level since August 2022.