LONDON: Aluminium prices dropped to a 17-month low on Wednesday and most other base metals lost ground as faltering global economic growth weakened the outlook for demand and boosted the dollar.
The dollar has strengthened more in 2022 than in any year since 1981 and on Wednesday reached a 20-year high, making dollar-priced metals costlier for buyers with other currencies.
Further increases to U.S. interest rates should serve to keep the dollar strong, analysts say.
Global equity markets fell as weaker than expected trade data in China, the biggest metals consumer, added to a grim picture for the global economy.
Benchmark aluminium on the London Metal Exchange (LME) was down 0.6% at $2,247.50 a tonne by 1023 GMT after touching its lowest since April 2021 at $2,243.
The price of the metal used in transport, packaging and construction has lost 20% this year.
Aluminium at 17-month lows as strong dollar overshadows smelter cuts
Supply of aluminium and other metals is tight and inventories are low, but the market is more focused on weakening demand and the rising dollar, said independent analyst Robin Bhar.
“If the dollar’s going higher, metals are going to struggle,” he said, predicting that aluminium prices would end the year around current levels.
Large inflows of aluminium into LME-registered warehouses have eased supply concerns, flipping quickly delivered cash aluminium from a premium to a discount against the three-month contract.
LME inventories increased to 309,500 tonnes, from 277,050 on Monday, but are still far below recent levels.
The amount of aluminium held in Japanese ports and Shanghai Futures Exchange (ShFE) warehouses has also increased in recent weeks.
Reflecting weakening demand, global aluminium producers have offered Japanese buyers lower premiums for primary metal shipments, sources said.
In other metals, LME copper was down 0.2% at $7,667.50 a tonne, zinc fell 1.4% to $3,123, nickel rose 0.3% to $21,640, lead lost 0.5% to $1,884.50 and tin was down 0.5% at $21,100.
Comments
Comments are closed.