LONDON: Aluminium prices touched their lowest in more than three months on Monday as speculative funds stepped up selling on expectations of rising inventories.

Weak data in top metals market China and a strong dollar weighed on the wider metals market.

Three-month aluminium on the London Metal Exchange (LME) fell 0.4% to $2,125 per metric ton by 1100 GMT, its weakest since Aug. 21.

Aluminium, used in construction, transport and packaging, has slid 10% on the LME since touching a five-month peak in early October.

“Aluminium is still seeing this CTA sell programme where the short is building to considerable levels,” said Alastair Munro, strategist at broker Marex.

Commodity Trade Advisor (CTA) investment funds are largely driven by computer programs.

There are also worries about excess supply showing up in LME warehouses next week ahead of the Third Wednesday expiry of the key three-month contract, Munro added.

Falling physical premiums a sign of aluminium surplus

“There has been much chatter about the possibility of stock inflows around the Third Wednesday prompt. It’s all rumour, but with premiums dropping it would make sense for there to be stock delivered,” he said.

Copper and most other base metals slipped after consumer prices in China fell at the fastest rate in three years last month while factory gate deflation deepened as weak domestic demand casts doubt over the economic recovery.

Also weighing on commodities was a stronger dollar ahead of U.S. inflation data and central bank meetings this week, making commodities priced in the U.S. currency more expensive to holders of other currencies.

“With so many key data release points this week, metals should continue to see sell-offs ahead of weak data prints,” one metals trader said.

LME copper shed 1% to $8,365 a ton, nickel eased 0.9% to $16,660, zinc lost 0.6% to $2,385, tin was down 0.3% at $24,485 and lead rose 0.2% to $2,028.50.