Aluminium Slides to Three-Month Low as Iran Sanctions Waiver Eases Gulf Supply Fears

Aluminium prices fell to their lowest in almost three months on Tuesday as the United States granted Iran a 60-day sanctions waiver following initial peace talks, improving prospects for a resumption in Gulf shipments through the Strait of Hormuz. The benchmark three-month aluminium on the London Metal Exchange was down 3.0% at $3,262.50 a metric ton by 0944 GMT, after hitting $3,225.5, its lowest since March 26. "Aluminum has come under additional pressure from expectations that Middle Eastern supply may gradually recover following recent geopolitical developments," said Ole Hansen, head of commodity strategy at Saxo Bank. Oil and liquefied natural gas tanker traffic through Hormuz started to pick up on Monday, raising expectations that disrupted aluminium deliveries from the Gulf region, normally accounting for 9% of global supply, would follow. With easing worries about the availability of aluminium for immediate delivery, the premium for the LME cash contract over the three-month forwards swung to a discount. The discount was last at $8.5 a ton on Tuesday, compared to a premium of $105 three weeks ago. In other LME metals, copper, zinc and tin hit their lowest since June 11, while lead and nickel touched their lowest since mid-April, amid broad-based risk reduction across asset classes led by a sell-off in global stocks due to expectations that the Federal Reserve would take more aggressive action to tackle inflation. "The weakness has been particularly pronounced in metals linked to the energy transition and rising power demand, as investors cut exposure to cyclical growth themes," Hansen said. Adding to the pressure, the U.S. dollar rose to its highest level in more than a year. A stronger U.S. currency makes dollar-priced metals more expensive for buyers using other currencies. LME copper fell 1.7% to $13,410.50, zinc lost 3.2% to $3,492.50, lead eased 1.2% to $1,941, tin slid 4.4% to $51,810 and nickel was down 2.5% at $17,315.