Aluminum prices hit 4-month low: Here we decode why
What's the story
Aluminum prices have plummeted to their lowest since mid-February, largely due to a strengthening US dollar. The industrial metal's value has been on a downward trajectory, with a 16% drop in June, the largest monthly decline since 2008. The winding down of the Middle East war has also impacted aluminum prices, which had previously surged from March to May due to supply disruptions in the region accounting for nearly 10% of global production.
Currency influence
US dollar's strength impacts aluminum prices
The US dollar's strength has been a major factor in the fall of aluminum prices. A gage of the dollar rose for a second day, gaining 2.5% over the last two months, partly due to a more aggressive stance from the Federal Reserve. This makes commodities priced in dollars more expensive for many buyers, further pressuring metals like aluminum and copper.
Market response
Investor concerns and price movements
Investors are worried about further gains in the dollar, which affects sentiment across industrial metals, as well as gold and silver. Some Chinese investors have also been diverting funds from commodities into equities due to a local stocks rally. Aluminum fell 0.5% to $3,071 a ton on the London Metal Exchange at 11:43am in Shanghai after hitting $3,060 earlier, the lowest since February 19.
Metal market
Other metals also decline
Along with aluminum, other metals have also witnessed a price decline. Copper lost 0.9% to $13,254 while iron ore declined 1.6% to $97.50 a ton in Singapore. The market is also awaiting Washington's review of refined copper imports that were excluded from last year's tariffs.