April 12, 2018 / 11:03 AM / 8 months ago

METALS-Rusal-linked supply fears fuel aluminium's rise to 6-year highs

* LME/ShFE arb: bit.ly/2wZSAEz

* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl (Recasts, adds comment)

By Pratima Desai

LONDON, April 12 (Reuters) - Aluminium prices hit six-year highs on Thursday as a result of worries about supply shortages after the United States imposed sanctions on Russia's Rusal .

Benchmark aluminium on the London Metal Exchange ended up 3.3 percent at $2,325 a tonne from an earlier $2,331, its highest since March 2012. It is up more than 15 percent since the sanctions were announced on Friday.

"Whatever happens there will be disruptions to global aluminium trade flows," Capital Economics commodities economist Caroline Bain said. "Medium term, we think Rusal will find markets for its metal...perhaps China, where you could also see output ramping up to offset any shortfalls."

RUSAL OUTPUT: According to analysts at CRU, Rusal accounts for 14 percent of supplies outside top producer China. Global output this year is estimated at 65 million tonnes.

INVENTORIES: Prices fell earlier on Thursday after data showed inventories of aluminium in LME warehouses jumped 94,450 tonnes or 7.5 percent to 1,345,225 tonnes MALSTX-TOTAL, their highest since July last year. The bulk of the metal arrived at LME Dutch warehouses in Vlissingen and Rotterdam.

The LME will suspend Rusal's aluminium from April 17, but metal already in warehouses before sanctions will be unaffected.

However, banks and traders will not want to risk holding any Rusal aluminium they already have in case of secondary sanctions and will deliver it to warehouses approved by the LME, used as a market of last resort, sources say.

PREMIUM: Traders said the premium for nearby aluminium over the three-month contract CMAL0-3 at around $18 a tonne in late afternoon trade would also attract metal to exchange warehouses.

DOLLAR: Other base metals on the LME were under pressure from a firmer U.S. currency, which when it rises makes dollar-denominated metals more expensive for non-U.S. firms. This is a relationship used by funds to buy and sell on signals generated by numerical models.

SRB: Zinc prices ended down 4.5 percent at $3,095 a tonne from an earlier four-month low at $3,082.5. They came under pressure from talk that China's State Reserve Bureau had been selling zinc stockpiles. The SRB did not reply to requests for comment.

NICKEL: Worries that Norilsk Nickel could face sanctions also boosted nickel prices this week. They ended down 1.1 percent $13,715 a tonne compared with a four-week high of $13,900 hit on Wednesday.

PRICES: Copper closed 1.9 percent lower at $6,821 a tonne, lead slipped 3.2 percent to $2,333 and tin lost 0.5 percent to $20,900.

Editing by David Evans and Alexander Smith

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