METALS-Aluminium drops as supply fears cool with the Middle East exporter finds a new route

March 18 (Reuters) - Aluminium fell on Wednesday as supply fears cooled with Emirates Global Aluminium finding alternative ways to export after the U.S.-Israeli war on Iran shut the Strait of Hormuz.

The most-active aluminium contract on the Shanghai Futures Exchange pulled back 1.02% to 24,790 yuan ($3,600.53) a metric ton as of 0202 GMT.

And the benchmark three-month aluminium on the London Metal Exchange declined 0.91% to $3,368.50 a ton. Reuters reported on Tuesday that EGA will route its aluminium exports and raw materials through Oman's port of Sohar in the coming days, after the U.S.-Israeli war against Iran shut the Strait of Hormuz. Aluminium Bahrain (Alba), meanwhile, is also exploring the possibility of using Sohar or Jeddah on Saudi Arabia's Red Sea Coast.

The potential of alternative shipping routes for aluminium producers offered some relief to the war-stirred supply fears, traders said.

But as the war stretches into a third week, concerns over production and shipping remain, with Alba initiating a shutdown for 19% of its capacity and Qatalum operating at roughly 60%. Some aluminium buyers in Japan, a major Asian importer, have agreed to pay a $350 premium per ton in the second quarter, up 79% from the current quarter. Copper also declined, weighed by inflation and growth fears amid higher energy costs and rising stock levels in LME sheds.

The Shanghai most-traded copper contract lost 0.93% to 99,130 yuan a ton, and the London benchmark copper dipped 0.13% to $12,758.50.

Copper stocks in LME warehouses rose to 330,375 tons, the highest level since August 2019.

Stocks of the red metal in warehouses registered with SHFE have also been rising rapidly since mid-December.

Among other SHFE base metals, zinc lost 2.30%, nickel dropped 1.36%, tin slid 2.96% and lead posted sole gain, rising 1.12%.

Elsewhere on the LME, zinc dropped 0.48% and tin shed 0.83%. Lead and nickel were little changed, up only 0.08% and 0.06%, respectively.

Wednesday, March 18

DATA/EVENTS

1000 EU HCIP Final MM, YY Feb

1230 US PPI Machine Manuf'ing Feb

1400 US Factory Orders MM Jan

($1 = 6.8851 Chinese yuan renminbi) (Reporting by Dylan Duan and Lewis Jackson; additional reporting by Tom Daly in London; Editing by Rashmi Aich)