Aluminium falls to 2-month low on Iran peace hopes, stronger dollar

Aluminium fell to its lowest in more than two months on Thursday, as hopes surrounding Middle East diplomacy, wider economic headwinds and a more optimistic supply outlook put pressure on prices. Benchmark three-month aluminium on the London Metal Exchange was down 0.79% at $3,144.5 a metric ton by 0700 GMT. It touched $3,136 a ton earlier, its lowest since July 28. The Shanghai Futures Exchange was closed for China's National Day holiday and will reopen on October 8. The market assessed the status of US-Iran peace talks after Tehran said it had received a US response to its latest proposal to resurrect the collapsed ceasefire in the Gulf, days after President Donald Trump said he had rejected it. Any easing of disruption to shipping through the Strait of Hormuz could improve flows of aluminium from Gulf producers to international markets. "If there's any news towards reopening the strait, then that would undermine the aluminium price," said David Wilson, head of metals strategy, BNP Paribas. Broader fundamental and macroeconomic factors also weighed on sentiment. The US dollar hovered near a two-month high as Treasury yields extended their rise, reflecting investor concerns about inflation and government debt. A stronger dollar makes dollar-denominated commodities more expensive for buyers using other currencies, while weaker economic sentiment can dampen demand expectations for industrial metals. Meanwhile, "Chinese aluminium exports are increasing the availability of metal in international markets at a time when domestic demand remains relatively subdued," Rupankar RM, head of market research and data intelligence at AL Circle, said. "At the same time, expectations of smelter restarts and additional capacity are making the supply outlook look more comfortable," Rupankar said. Among other LME metals, copper was little changed, up only 0.01%, zinc dipped 0.13%, lead was steady, nickel lost 0.46% and tin gained 0.66%.