LONDON: Aluminium prices slipped to their lowest level in more than four months on Thursday, weighed down by weaker risk appetite and indications that supply is recovering faster than expected following disruptions from the Iran war.
Benchmark three-month aluminium on the London Metal Exchange shed 0.4percent to USD3,064.50 a metric ton in official open-outcry trading, marking the fourth straight session of losses. It fell to USD3,040 earlier in the session, its lowest since February 19.
LME aluminium has tumbled by nearly 20percent over the past month as the US and Iran moved closer to ending their conflict. The Middle East accounts for about 9percent of global aluminium production. “Supply concerns have eased following the ceasefire and improving outlook for regional trade flows, prompting investors to take some of the risk premium out of prices,” said Ewa Manthey, commodities strategist at ING.
Many investors had bet on a slow recovery in the Middle East output of the metal used in transport, construction and packaging. But Emirates Global Aluminium said it would restore production sooner than expected at its damaged Al Taweelah complex - one of the world’s largest aluminium production sites. More supply will be added from other regions as well, with Hydro saying it planned to partially restart aluminium production in Slovakia.
Analyst Sudakshina Unnikrishnan at Standard Chartered Bank noted that the looser supply situation was also impacting aluminium spreads and regional premiums. The cash LME aluminium contract was at a discount of USD9.80 per ton to the three-month futures, compared to a premium of USD105 on June 1.
The wider LME complex was in the red as risk appetite waned and Asian shares fell ahead of key US data. “Broader caution ahead of US payrolls data and concerns over demand are outweighing support from a weaker dollar,” Manthey said.
LME copper dropped 0.4percent in official activity to USD13,248 a ton, zinc lost 1percent to USD3,464, lead added 0.2percent to USD1,869, nickel fell 0.8percent to USD16,220 and tin gave up 0.6percent to USD51,350.
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