Aluminum has led gains in base metals this year with an advance of 14%, as rising fuel costs and environmental curbs snarl supply in Europe and China. The spot premium on the London Metal Exchange reached the widest since 2018 this week, signaling a lack of immediate supply, before retreating on Tuesday.

In China, the biggest producer and consumer of aluminum, prices are supported by tight supply because of pandemic-driven lockdowns and constraints during the Beijing Winter Olympics, Jinrui Futures Co. wrote in a note.

Separately, China’s inflation slowed in January, giving the central bank more room to ease before a key political leadership meeting later this year. The outlook for a further relaxation of monetary policy is supportive for metals.

Aluminum for three-month delivery on the LME fluctuated between gains and losses, and was flat at $3,208 a ton by 10:40 a.m. in Shanghai. The metal reached $3,333 in intraday trading last week, the highest price since a record of $3,380.15 was touched in 2008. Other metals were mixed.