Aluminium falls to 2-month low on Iran peace hopes, stronger dollar

By Solomon Cefai

SINGAPORE, Oct 1 (Reuters) - Aluminium fell to its lowest level in more than two months on Thursday, tracking a broader weakness in industrial metals and hopes that supply from the Middle East, a major producer, could improve if tensions ease.

Benchmark three-month aluminium on the London Metal Exchange was down 0.74% at $3,146 a metric ton by 0300 GMT. It touched $3,141 a ton earlier, its lowest since July 28.

The Shanghai Futures Exchange (SHFE) was closed for China's National Day holiday and will reopen on October 8.

The market assessed the status of US-Iran peace talks after Tehran said it had received a US response to its latest proposal to resurrect the collapsed ceasefire in the Gulf, days after President Donald Trump said he had rejected it.

"There's some sensitivity for aluminium there, in terms of flows of material through the Gulf, so if there's any news towards reopening the strait, then that would undermine the aluminium price," said David Wilson, head of metals strategy, BNP Paribas.

Broader macroeconomic factors also weighed on sentiment. The US dollar hovered near a two-month high as Treasury yields extended their rise, reflecting investor concerns about inflation and government debt.

A stronger dollar makes dollar-denominated commodities more expensive for buyers using other currencies, while weaker economic sentiment can dampen demand expectations for industrial metals.

For its part, LME copper nudged down 0.08%. The red metal ended September with its third consecutive month of gains on Wednesday, despite a drop earlier in the month.

Copper prices have been supported by investor expectations of demand growth tied to electrification and the AI infrastructure buildout.

Macroeconomic gloom offset support from waning stocks in LME-registered and SHFE-monitored warehouses .

Among LME metals, zinc lost 0.4%, lead dipped 0.16%, nickel dipped 0.05% and tin added 0.18%.