Aluminium prices gain on weaker dollar, softer US rate hike bets

SINGAPORE: Aluminium prices rose on Friday, supported by a weaker dollar and easing concerns over an imminent US interest rate hike. Benchmark three-month aluminium on the London Metal Exchange was up 0.53% at $3,108 a metric ton by 0300 GMT.

The most-traded aluminium contract on the Shanghai Futures Exchange climbed 1.18% to 22,755 yuan ($3,355.60) a ton. The market was closely watching macroeconomic conditions, which offset pressure from announcements this week suggesting improved aluminium supply prospects.

In a note published overnight, Citi said concerns over a rapid return of Middle East supply appeared overstated and supply is unlikely to arrive quickly enough to offset demand growth.

Data signalling a cooler US labour market calmed expectations of a near-term Federal Reserve interest rate hike, lending support to industrial metals.

Higher rates can curb economic activity and demand for metals.

The odds of a July rate hike have fallen to about one-third, although an increase later this year is still widely expected.

“The weaker and easing concerns of monetary tightening boosted risk appetite and pushed the metals higher,” Daniel Hynes, senior commodity strategist at ANZ, said in a note.

A cheaper dollar makes greenback-denominated commodities more affordable for buyers using other currencies.

Copper also firmed, despite recent weakness in semiconductor shares.

The red metal has benefited in recent years from projections of demand growth tied to AI infrastructure, electrical grid upgrades and electric vehicles.

PMI data this week showed factory activity in leading copper consumer China grew for a seventh straight month in June.

Meanwhile, the Yangshan copper premium, which reflects buying interest there, was at its joint highest level since 2025. On the LME copper rose 0.72%, while on the SHFE it rose 0.8%.

Among other LME metals, zinc added 0.33%, lead rose 0.32%, nickel gained 1.26% and tin climbed 1.84%.

On SHFE, zinc dipped 0.1%, lead added 0.35%, nickel gained 0.51% and tin firmed 0.78%.