Stronger dollar and hopes of Middle East calm push aluminium to three-week low

Benchmark three-month aluminium on the London Metal Exchange was down 2.3% at $2,995 a metric ton by 1409 GMT. It touched $2,988, its lowest level since October 20.

The metal extended losses as the dollar index rose after hotter-than-expected US inflation data boosted expectations that the Federal Reserve would raise interest rates next month. A stronger US currency makes dollar-priced metals more expensive for buyers using other currencies.

Aluminium prices have fallen 21% since reaching a four-year high in June. Supply restarts in the Middle East, disrupted by the Iran war, have progressed faster than expected. New production capacity is also expected to come online in Indonesia. US President Donald Trump said on Monday he would hold off on new military strikes against Iran for the time being after appeals from countries in the region.

"As more metal returns to the market from the Middle East and new Indonesian projects ramp up, global supply growth should outpace demand, flipping the market into surplus in 2027," analysts at ANZ said. This should limit aluminium price gains next year. However, lingering supply risks in the Middle East are likely to keep prices volatile and above $3,000 through early 2027, they added.

In China, customs data showed exports of aluminium and aluminium products rose 18% to 5.9 million tons in January-October. Relatively low inventories are providing some support to aluminium. Available stocks in LME-registered warehouses stood at their lowest level since March 2025. The premium of the LME cash aluminium contract over the three-month benchmark hit a five-month high.

Among LME metals, copper fell 1.2% to $13,730.50 a ton, and zinc was steady at $3,730.50. Lead dipped 0.4% to $1,878.50, tin lost 0.8% to $45,990 and nickel dropped 1.0% to $16,060.