Aluminium Heads for Fourth Weekly Drop on Mideast Supply Return
Aluminium headed for a fourth weekly decline, the longest losing streak since April 2025, as a renewed selloff in Asian tech stocks added to pressure from a stronger US dollar and returning Middle East supplies.
The light metal was on track to lose approximately 7% for the week, as the interim US-Iran peace deal fuelled expectations of renewed shipments from a region that accounts for nearly a tenth of global production. The war had shuttered local smelters and choked shipments of metal and raw materials in and out of the Persian Gulf.
Still, an attack on a cargo ship on Thursday renewed concerns about safe passage through the Strait of Hormuz and fuelled uncertainty about future transits.
Broader Metals Decline
Industrial metals, including copper, were also hit on Friday by a renewed selloff in Asian tech shares, underscoring the heightened volatility that has gripped the sector this week. Metals often move in tandem with technology stocks due to their applications in electronics, wiring, and AI-driven data centres.
Aluminium fell 0.2% to $3 158 per tonne on the London Metal Exchange as of 11:10 am in Shanghai. Other base metals also declined, with copper down 0.9% and nickel losing 1%.
Macro Pressures
Adding to the pressure on metals earlier in the week, US Federal Reserve policymakers signalled growing support for interest-rate hikes in the coming months. Higher borrowing costs are a headwind for commodities that do not pay interest, making them less attractive investments than yield-bearing assets like Treasuries.
Renewed dollar strength has also made metals priced in the US currency more expensive for most buyers. A gauge of the greenback was on track to gain approximately 0.7% this week.
Analyst View
Aluminium will continue to fluctuate at a weak level, kept in check by bearish short-term macro sentiment, brokerage Jinrui Futures said in a note.
Market Sentiment:
The sentiment is bearish in the near term, reflecting the removal of the Middle East supply premium as the US-Iran peace deal fuels expectations of renewed shipments from the region. The 7% weekly decline is a significant unwind, and pressure from a stronger dollar and potential Fed rate hikes adds further headwinds. However, the attack on a cargo ship highlights lingering geopolitical risks, and the long-term demand from AI data centres and the energy transition remains supportive. The correlation with Asian tech stocks adds volatility, as metals are sensitive to economic growth expectations. The market is in a consolidation phase, with downside risk near-term, but limited structural downside given supply constraints and the fragile nature of the peace. The next catalysts are the formal peace deal signing and any renewed tensions in the Strait of Hormuz. For now, caution is warranted, but the correction has created a more balanced risk-reward profile for patient investors.
Disclaimer:
This content has been generated using AI technology and is intended for informational purposes only. While efforts have been made to ensure accuracy and relevance, this text should not be considered professional advice or an official statement. Always verify information from authoritative sources before making any decisions. This is not financial advice.
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