Firmer dollar, Middle East de-escalation hopes push aluminum price to three-week low

Aluminium prices fell on Tuesday to their lowest in three weeks as a firmer dollar, rising exports from top producer China and hopes of de-escalation in the Middle East outweighed support from tight inventories.

Benchmark three-month aluminium CMAL3 on the London Metal Exchange was down 2.3% at $2,995 a metric ton by 1409 GMT after touching $2,988, its lowest level since October 20.

The metal extended losses as the dollar index rose after hotter-than-expected US inflation data bolstered expectations that the Federal Reserve would raise interest rates next month. A stronger US currency makes dollar-priced metals more expensive for buyers using other currencies. MKTS/GLOB

Aluminium prices have declined 21% since reaching a four-year high in June as supply restarts in the Middle East, disrupted by the Iran war, have progressed faster than expected, while new production capacity is expected to come online in Indonesia.

US President Donald Trump said on Monday he would hold off on new military strikes against Iran for the time being after appeals from countries in the region.

“As more metal returns to the market from the Middle East and new Indonesian projects ramp up, global supply growth should outpace demand, flipping the market into surplus in 2027,” analysts at ANZ said.

This should limit aluminium price gains next year, although lingering supply risks in the Middle East are likely to keep prices volatile and above $3,000 through early 2027, they added.

In China, customs data showed exports of aluminium and aluminium products rose 18% to 5.9 million tons in January-October.

Meanwhile, providing some support to aluminium are relatively low inventories: available stocks in LME-registered warehouses MALSTX-TOTALstood at their lowest level since March 2025, while the premium of the LME cash aluminium contract over the three-month benchmark CMAL0-3 hit a five-month high.

Among LME metals, copper CMCU3 fell 1.2% to $13,730.50 a ton, zinc CMZN3 was steady at $3,730.50, lead CMPB3 dipped 0.4% to $1,878.50, tin CMSN3 lost 0.8% to $45,990 and nickel CMNI3 dropped 1.0% to $16,060.

(Reporting by Polina Devitt; additional reporting by Solomon Cefai;Editing by Shreya Biswas and Vijay Kishore)