Prices of aluminum climbed to decade-highs on Monday, amid a military coup in Guinea, which serves as a major source of bauxite needed to make the lightweight metal.
- The three-month spread on the London Metal Exchange jumped 0.9% to $2,757 a metric ton, a level not seen since early 2011. Mining companies and producers across the globe also posted gains following the development.
- A military faction over the weekend took control and detained President Alpha Conde, and closed the country’s land and air borders. The borders were reopened on Monday, but analysts warn that any closure would impact global bauxite supplies.
- Guinea is the world’s largest bauxite exporter, with 82.4 million tons shipped out in 2020. The majority of the supplies are made into alumina, used primarily to make aluminum. The country is also a major supplier of iron ore.
- Analysts believe the coup could also hit China, the biggest importer of Guinea’s bauxite. Australia, another supplier of bauxite, could likely step up and compete for China’s imports if the coup persists.
Prices are also expected to soften with the new Chinese supply.
DBB closed Friday up 0.58%.
Source: WSJ
