Aluminium slides as new Iranian proposal revives hopes of renewed peace talks

BEIJING: Aluminium prices slid on Tuesday, dragged by revived hopes of progress in the US-Iran peace talks that could help reopen the Strait of Hormuz following a new Iranian proposal, though lingering uncertainty over a quick end to the war limited losses.

By 0157 GMT, the most-traded aluminium contract on the Shanghai Futures Exchange lost 1.5% at 24,590 yuan ($3,600.87) per metric ton, its lowest level since April 13. Benchmark three-month aluminium on the London Metal Exchange was down 0.46% at $3,561.5 per ton, its weakest since April 22.

US President Donald Trump discussed a new Iranian proposal on resolving the war with Tehran with his top national security aides on Monday, with a US official saying Trump was unhappy with the proposal because it did not address Iran’s nuclear program.

Investors have been closely monitoring the US-Iran talks to gauge prospects of a reopening of the essential waterway in the Gulf that accounted for roughly 9% of global aluminium supply before the war.

Both sides have held talks but failed to reach an agreement that will end the war that has fuelled inflation and darkened the outlook for global economic growth.

The war in Iran has pushed analysts to raise their aluminium price forecasts following supply disruptions, but prices are expected to ease below current elevated levels in the coming months, a Reuters poll showed.

The steady destocking in LME warehouses created a contrast with a persistent inventory pile-up on the Shanghai exchange, limiting the convergence of price differences at home and abroad, analysts at Everbright Futures said in a note.

For other SHFE metals, copper shed 0.82%, nickel and lead were little changed, tin slipped 2.44%, and zinc fell 2.68%.

Among other LME metals, copper eased 0.03%, lead dipped 0.18%, tin dropped 0.55%, zinc declined 1.04% while nickel added 0.54%.