Aluminium prices climbed around six percent in early trading on Monday after Iran attacked two major plants in the Gulf that produce the widely used metal, raising concerns over supply disruptions.
Gains later reduced, though prices were still up 4.2 percent at $3,435 per ton on the London Metal Exchange.
"Escalation and expansion of the Middle East conflict sent crude oil and aluminium up at the open," noted Ipek Ozkardeskaya, an analyst at Swissquote Bank.
Iran's Revolutionary Guards said they launched missile and drone strikes on aluminium plants in Bahrain and the United Arab Emirates over the weekend.
The US-Israeli war on Iran and resulting closure of the Strait of Hormuz has already restricted shipments of aluminium to export markets in the United States and Europe.
Aluminium Bahrain, which runs the world's largest single-site smelter, said it was assessing the damage from the Iranian strikes. Emirates Global Aluminium, meanwhile, said its plant sustained "significant damage.”
Following sanctions on Russian aluminium over the war in Ukraine, "the Middle East became a crucial supplier to the European Union and countries including the US and Japan", analysts from ANZ bank said.
"Any further disruption to deliveries would add upward pressure on aluminium prices and premiums," they added.
