METALS-Aluminium rallies, heads for biggest weekly jump since 2023 as Mideast war intensifies

(Updates prices, weekly milestones)

March 6 (Reuters) - Aluminium soared to its highest in nearly four years on Friday and was set for its biggest weekly rise since early-2023 as supply concerns due to the U.S.-Israel war on Iran intensified.

Benchmark three-month aluminium on the London Metal Exchange was up 3.4% at $3,408.50 per metric ton as of 1700 GMT. It earlier touched $3,449.50, the highest since April 2022 as the Middle East conflict threatened to cut off aluminium shipments from the region via the Strait of Hormuz.

The metal was on course to gain 8.5% for the week, marking its biggest weekly gain since January 2023. Qatari smelter Qatalum and Aluminium Bahrain have already declared force majeure on shipments amid rising tensions in the Middle East, which erupted last Saturday.

"Given the Middle East accounts for around 9% of global production and supply is at risk, we have raised our shortfall forecast to 1.5 million tons from 1 million tons" for 2026, Bank of America said in a note.

Investors do not want to be short on aluminium heading into an uncertain weekend, one trader said to explain Friday's rally.

The cash LME aluminium contract was trading at an $18.75 a ton premium over the three-month forward , pointing to a pressing need for near-term metal. LME aluminium inventories slipped by 2,250 tons to 456,875 tons, the lowest since July.

In the U.S., the Midwest premium, which buyers pay on top of the LME price for physical aluminium, rose 3.1% to a record $1.10 per lb, or $2,425 per ton, underscoring scarcity.

Meanwhile, copper fell 0.3% to $12,860 per ton, coming under pressure as LME inventories climbed to 284,325 tons, the highest since October 2024, following inflows in Singapore and New Orleans.

The red metal was on course to shed 3.6% this week for its steepest weekly dip since April last year.

Zinc was up 2.2% at $3,297, as traders feared low concentrate treatment charges could force smelters to cut output. Lead gained 0.5% to $1,951.50, nickel climbed 1.4% to $17,460 and tin edged down 0.1% to $49,035. (Reporting by Tom Daly; additional reporting by Lewis Jackson and Dylan Duan; Editing by Rashmi Aich, Harikrishnan Nair, Jan Harvey and Diti Pujara)