Aluminum gained, with traders seeing little prospect of an imminent opening of the Strait of Hormuz that would ease availability of the metal.
The lightweight metal rose as much as 1.7% to $3,534 a ton on the London Metal Exchange, paring a weekly loss. Iran delivered a new proposal to the US and President Donald Trump vowed to maintain a naval blockade, as the two sides pursue behind-the-scenes diplomacy to turn a fragile ceasefire into a lasting peace.
The fate of the Strait of Hormuz lies at the heart of the current stalemate. Both Iran and the US have signaled they are waiting for the other to move first before they agree to ease restrictions on traffic.
Prices for aluminum — used in everything from cars to beer cans — recently hit the highest in more than four years, with the Iran war bringing shipments through the critical chokepoint to a near halt. Roughly 10% of global aluminum output comes from the Middle East.
“We are in a very large supply hole here,” Greg Shearer, head of base and precious metals research at JPMorgan Chase & Co., told Bloomberg TV. Prices are likely to hit $4,000 a ton even if the strait is reopened, he said, given the length of time required for smelters to restart and supplies to come back online.
Other base metals were mixed on Friday, with copper holding above $13,000 a ton as China’s metal fabricators restocked before the start of the country’s week-long holiday. Markets were also closed in a number of other countries for Labor Day.
Meanwhile, economic data overnight from the US showed gross domestic product expanded at a 2% annual rate over the first quarter, lifting sentiment about the health of the world’s largest economy.
Written by: Jack Ryan and Paul-Alain Hunt — With assistance from Mark Burton @Bloomberg
The post “Aluminum Gains as Trump Vows to Maintain Naval Blockade on Iran” first appeared on Bloomberg
