Aluminium hits near two-week low on Ukraine talks

Aluminium prices slid to the weakest in nearly two weeks on Tuesday as the prospect of an end to the Ukraine war might allow major producer Russia to boost supply.

Benchmark three month aluminium on the London Metal Exchange fell 0.6% to $2,573 a metric ton in official open-outcry trading, its lowest since August 6. Aluminium prices have slid for three sessions including Friday, when U.S. President Donald Trump met Russian President Vladimir Putin in an effort to broker an end to the war in Ukraine. When Trump met Ukraine's president on Monday, they both raised the prospect of three-way talks with Putin.

"Aluminium is leading the index lower this week and that could be part of the so-called peace dividend. Negative price action due to the prospect for increased supply," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. The LME has banned metal produced in Russia after mid-April 2024 from its warehousing system to comply with U.S. and British sanctions imposed over Russia's 2022 invasion of Ukraine and many companies have declined to use Russian material. "Aluminium has been on an uptrend since April, and it looks like today we're just dipping below that. So, I would imagine we're also seeing some technical selling below $2,580," Hansen added.

LME aluminium has rebounded 12% since touching an eight-month low of $2,300 in April.

Providing some support to the metals complex was the dollar index, which weakened as investors awaited policy cues from an annual Federal Reserve symposium later this week.

A softer dollar makes commodities priced in the U.S. currency less expensive for buyers using other currencies.

Among other metals, LME copper dipped 0.1% in official activity to $9,728 a ton, nickel shed 0.5% to $15,080 and zinc fell 0.1% to $2,773.50; lead was flat at $1,971 and tin added 0.2% to $33,755.