* Mercuria cancels nearly 100,000 tons aluminium in LME

warehouses

* Aluminium premiums soar in US and Europe due to

shortages

By Pratima Desai

LONDON, March 11 (Reuters) - Commodity trader Mercuria

plans to withdraw large volumes of aluminium from LME

warehouses, according to three sources, as the shutdown of the

Strait of Hormuz freezes Middle East shipments and further

strains supplies in Europe and the United States.

The Middle East produces about seven million metric tons of

primary aluminium annually or around 9% of the global total. The

closure of the Strait of Hormuz due to the U.S.-Israeli war

against Iran has stalled aluminium shipments since last week.

Swiss-based Mercuria cancelled or earmarked for delivery

nearly 100,000 tons of aluminium in LME-approved warehouses in

Port Klang, Malaysia on Monday. , the sources, who

were familiar with the matter, said.

Mercuria declined to comment.

Aluminium producers in the Middle East include Emirates

Global Aluminium, Aluminium Bahrain and Qatalum.

Last week, Alba, which operates one of the world's biggest

smelters, declared force majeure, warning customers of delays to

shipments while Qatalum started to shut down.

SLOW PROCESS TO RESTART PRODUCTION

Smelters have to reduce production slowly to avoid

permanently damaging the aluminium pots that hold the molten

metal. Once pots are cooled, restarting them is a slow process,

keeping metal off the market for many more months.

Mercuria is likely to need the aluminium in LME storage

facilities to meet obligations to customers in Europe and the

U.S., where there are shortages of aluminium used in transport,

construction and packaging, the sources said.

The physical market premium aluminium consumers in the

United States and Europe pay above the LME price -- currently

around $3,450 a ton - have soared since the war started.

In Europe, the duty-paid aluminium premium at around

$420 a ton is at its highest since September 2022 when consumers

stopped buying Russian aluminium after Russia invaded Ukraine.

In the United States, the Midwest premium at around

$1.09 a lb or $2,400 a ton is near record highs.

Cancelled warrants -- title documents conferring ownership

-- stood at 177,325, or 40% of the total on Tuesday, compared

with 9% on February 27, before the turmoil in the Middle East

started.