Aluminum prices retreated on Thursday after rising for a third straight session on supply concerns as the dollar strengthened and the market awaited further news from smelters in the war-hit Middle East.
Benchmark three-month aluminum prices on the London Metal Exchange were down 0.8% at $3,315 a tonne at 1030 GMT, having previously risen as much as 1.7%.
The metal, which is widely used in packaging and transportation, hit a nearly four-year high on Wednesday as force majeure at Middle Eastern smelters Qatalum and Aluminum Bahrain increased supply concerns. The Gulf region supplied 8% of the world’s aluminum last year.
Citi analysts raised their aluminum price target for LME to $3,600 from $3,400, saying the price could rise to $4,000 in a bullish scenario.
“I think the market is stabilizing a little bit,” said Thu Lan Nguyen, head of commodity research at Commerzbank, noting that the euro-dollar rate and Brent crude were stable after a few days of volatility. “So I think the decline in aluminum prices basically fits into that situation.”
He added that the market is currently in a “wait and see” mode as events in the Middle East unfold.
LME’s aluminum inventory has fallen to 459,125 tonnes, the lowest level since July last year, following the spill of 2,000 tonnes from Klang Port. More than 45,000 tonnes were ordered to be removed from storage sites in Malaysia earlier this week, suggesting traders are looking to cash in on the short supply.
Nguyen said global inventories “are still at a relatively comfortable level,” but U.S. inventories are tight, noting that import tariffs had been driving up physical aluminum premiums well before the U.S. and Israeli attack on Iran.
Copper fell 0.7% to $12,960 a tonne as inventories rose to their highest since October 2024.
Prices were also weighed down by a strong dollar, making USD-denominated products less affordable for buyers using other currencies.
Zinc fell 0.6% to $3,307, lead fell 0.9% to $1,944, nickel fell 1.0% to $17,310 and tin fell 2.2% to $49,650.
(Reporting by Tom Daly; Additional reporting by Lewis Jackson and Dylan Duan; Editing by Subhranshu Sahu and Elaine Hardcastle)
