Aluminum Prices Drop to Lowest Level Since February Amid Dollar Strength

SadaNews - Aluminum prices have dropped to their lowest level since mid-February, as the strength of the US dollar continues and the easing tensions in the Middle East exert pressure on commodities.

The industrial metal also continued to incur losses after falling 16% in June, marking the largest monthly decline since 2008. The de-escalation of the Middle East conflict has cast a shadow over aluminum prices, which had surged between March and May due to supply losses from a region that accounts for about one-tenth of global production.

Ole Hansen, Director of Commodity Strategy at Saxo Bank, stated, "Aluminum has experienced a sharp decline, and its prices have returned to pre-war levels. It seems that investors' bets on rising prices have not panned out, resulting in significant losses for them, which in turn has exacerbated the price drop."

Aluminum Investors' Concerns

At the same time, an index measuring the performance of the dollar has risen for the second day. The US currency has increased 2.5% over the past two months, partly driven by the Federal Reserve adopting a more hawkish stance. This makes dollar-denominated commodities more expensive for many buyers.

Chenting Zhou, a trader at Hangzhou Chenglian Industrial, remarked that investors are concerned about the dollar gaining further momentum, which affects market sentiment across industrial metals, as well as gold and silver. He added that some Chinese investors are also shifting their money from commodities to stocks, capitalizing on the rise of the local market.

Aluminum prices fell by 1.2% to $3,050 per ton on the London Metal Exchange at 11:33 AM local time, after previously dropping to $3,045.50, the lowest level since February 19.

The market is also awaiting Washington's anticipated assessment of refined copper imports, which were exempted from last year's tariffs. Commerce Secretary Howard Lutnick was scheduled to provide an update to President Donald Trump regarding the US copper market by Tuesday.

The absence of any update regarding tariffs has pressured copper prices, which declined by 1.9% to $13,121 per ton.