Aluminium falls on EGA alumina restart, still set for weekly rise

• EGA's Al Taweelah refinery expects to reach 50% capacity within days and full production by year-end, though export prospects remain uncertain due to renewed U.S.-Iran tensions affecting the Strait of Hormuz
• LME aluminium inventories remain at their lowest level since September 2022, with the cash contract trading at a $2/ton premium over three-month forward contracts, indicating tight near-term supply
• Market sentiment favors selling rallies amid expectations that new Indonesian aluminium production and Gulf supply recovery will exceed earlier concerns

Summary:

Aluminium prices dropped sharply on Friday, declining 1.8% to $3,143.50 per metric ton on the London Metal Exchange (LME), after Emirates Global Aluminium (EGA) announced it had restarted its alumina refinery in the United Arab Emirates following a 3.5-month outage. Prices fell as much as 2.1% during the session.

Despite the daily decline, aluminium remained on track for a 1.8% weekly gain, ending five consecutive weeks of losses. The recovery was driven by easing Middle East tensions and optimism about supply normalization.

Key Companies and Developments:

• EGA, the Middle East's largest aluminium producer, expects its Al Taweelah refinery to reach 50% capacity "within days" and full production by year-end
• Indonesian aluminium smelters are ramping up production, adding to global supply concerns
• Market sentiment reflects expectations that Gulf and Indonesian supply recovery will exceed previous estimates

Market Indicators:

• LME aluminium inventories remain at their lowest levels since September 2022
• The cash LME aluminium contract traded at a $2-per-ton premium over three-month forwards, indicating tight near-term physical availability (backwardation)
• However, export flows through the Strait of Hormuz remain uncertain due to renewed U.S.-Iran tensions

Other Metals:

• Copper rose 0.1% to $13,495.50/ton, heading for a 1% weekly gain
• Shanghai copper stocks plunged 18.3% to 100,271 tons (lowest since December)
• Nickel gained 0.9% to $16,735 amid Indonesian sulphur shortages
• Lead, tin, and zinc saw minimal movement