Aluminium falls to three-month low on fading Gulf risk premium, strong dollar

Aluminium prices fell to three-month lows on Wednesday, pressured by a lower Middle East risk premium and a stronger U.S. dollar. LME benchmark three-month aluminium was down 0.76% at $3,208 a metric ton by 0701 GMT, after touching $3,191, the lowest since March 24 earlier in the session. The most-traded aluminium contract on the Shanghai Futures Exchange lost 1.43% to close at 23,405 yuan ($3,439.23) a ton. It fell to 23,320 yuan, its lowest since March 20, earlier on Wednesday. The market expects aluminium supply from the Gulf to normalise after war-triggered production and shipping disruptions as well as higher energy costs, but the resumption in flows will nonetheless be gradual, analysts have said. "The peace dividend [in aluminium] is primarily a reduction in uncertainty, not a structural change in aluminium supply-demand fundamentals," Rupankar RM, head of market research and data intelligence at AL Circle, said. Elsewhere, the U.S. dollar gained for a fifth day, supported by safe-haven buying, and made the full base metals complex, which is mostly traded in the greenback, more expensive for buyers using other currencies. The dollar has strengthened on expectations of a U.S. rate hike amid stubbornly high inflation, while a tech-led equity selloffhas clouded growth hopes. Higher interest rates make borrowing more expensive and dampen demand sentiment for metals tied to economic growth. Copper gained 0.14% on the LME and fell 0.56% on the SHFE. The red metal has benefited from forecasts of strong demand for AI infrastructure, grid investment and electric vehicles. Among other LME metals, zinc dropped 0.69%, lead dipped 0.08%, nickel lost 2.02% and tin lost 0.23%. Elsewhere on SHFE, zinc dropped 1.76%, lead faded 0.24%, nickel fell 3.14% and tin plunged 3.64%.