Aluminum price falls to a 12-week low on stronger dollar

Aluminum prices fell to a 12-week low on Thursday and copper hit its lowest in two weeks as a stronger dollar weighed on sentiment.

Benchmark three-month aluminum CMAL3 on the London Metal Exchange was down 1.7% at $3,115 a metric ton by 16:08 GMT after touching its lowest since July 7 at $3,112.

The dollar marked its strongest level since April 2025, with Treasury yields hitting their highest in decades. A stronger dollar makes dollar-denominated metals more expensive for buyers using other currencies.

Aluminum prices are down 18% since hitting a four-year high in June on easing worries about supply from the Gulf region and expectations of new production capacity in Indonesia.

Analysts at Macquarie downgraded their forecast for this year’s deficit in the global aluminum market to 820,000 tons, down 120,000 tons from their June estimate, as restarts in the Middle East progressed faster than expected.

Emirates Global Aluminium said in late August that it had brought a quarter of its Al Taweelah smelter in Abu Dhabi back online as the company works to recover from damage caused by an Iranian attack in March.

In the near term, the aluminum market is relatively tight, Macquarie said in a research note, squeezed by Chinese downstream restocking ahead of the public holiday. However, the market is still on track to swing to a surplus of 410,000 tons in 2027.

Macquarie expects average aluminium prices at $3,050 in 2027 compared with $3,325 this year.

On the supply side, Rio Tinto (ASX: RIO) reached agreements to secure the ongoing operation of its Bell Bay Aluminium smelter in Tasmania to the end of 2031.

Among other LME metals, copper CMCU3 fell 1.1% to $14,253.50 a ton after hitting its lowest since September 17 at $14,213.50.

Supervisors at Chile’s Escondida copper mine, the world’s largest, rejected a collective contract offer, paving the way for a potential strike.

LME zinc CMZN3 lost 2.7% to $3,727 a ton, lead CMPB3 eased by 0.8% to $1,858, tin CMSN3 rose 0.3% to $53,920 and nickel CMNI3 dipped 2.1% to $15,595.

Zinc and lead hit their lowest since August 20 and July 16, respectively, while nickel touched lowest since end-December.

The Shanghai Futures Exchange was closed for China’s National Day holiday until October 8.

(Reporting by Polina Devitt. Additional reporting by Solomon Cefai. Editing by David Goodman and Vijay Kishore)