Aluminium near 3-month low on Gulf supply hopes, strong dollar

SINGAPORE: Aluminium prices stayed near a three-month low on the London Metal Exchange on Wednesday, as a strong dollar and hopes of a resumption in Middle East supply weighed.

LME benchmark three-month aluminium edged up 0.17% to $3,238 a metric ton by 0300 GMT, after having plunged in the previous session.

The most-traded aluminium contract on the Shanghai Futures Exchange lost 1.12% to 23,480 yuan ($3,453.50) a ton.

Earlier in the session, it fell to a three-month low of 23,320 yuan a ton.

Hopes of easing tensions between the US and Iran led to expectations that supply from the Middle East, which normally accounts for 9% of global primary aluminium smelting capacity, could gradually resume after three months of war.

The LME cash-to-three-month premium was in a slight contango at $-3.46 a ton on Tuesday, suggesting an improvement in immediate availability of supply.

The US dollar climbed for a fifth day, supported by safe-haven buying, and made the full base metals complex, which is traded in the greenback, more expensive for buyers using other currencies.

Fears of higher-for-longer interest rates amid stubbornly high inflation rates and a more hawkish US Federal Reserve remained a macroeconomic headwind, and a tech-led equity selloff on Tuesday clouded growth hopes.

Higher interest rates make borrowing more expensive and dampen demand sentiment for metals tied to economic growth.

Copper edged up by 0.16% on the LME but fell 0.98% on the SHFE.

The red metal benefited in recent years from forecasts of strong demand for AI infrastructure, grid investment and electric vehicles.

Among other LME metals, zinc dipped 0.06%, lead ticked 0.08% higher, nickel ticked 0.1% higher and tin lost 0.86%.

On SHFE, zinc dropped 1.72%, lead dipped 0.31%, nickel dropped 1.99% and tin dropped 4.84%.