Aluminium is getting cheaper in the eyes
The aluminium price is heading toward the largest monthly decline since 2008, driven by growing expectations of supply normalization from the Middle East.
In June alone, the metal fell by over 15%, as de-escalation signals between the United States and Iran sparked a wave of optimism in the market.
However, as Axios reports, relations between the states may be far from improving, especially in the face of new attacks.
“The United States and Iran are bombing each other again, further undermining the fragility of the ceasefire,” the report said.
“One of the reasons for the resumption of fighting appears to be different interpretations of the Memorandum of Understanding (MOU) regarding the end of the war, especially concerning the Strait of Hormuz,” added the report.
Meanwhile, Trump continues to threaten further attacks, making it difficult to sustain commodity price declines for longer.
“American aircraft just bombed Iranian missile and drone depots and coastal radar stations for a repeat violation of the ceasefire agreement! It’s very likely they will never learn!” the U.S. President said in a Saturday post on Truth Social.
“There may come a moment when we can no longer keep our sanity and will be forced to finish militarily what we have so effectively started. If that happens, the Islamic Republic of Iran will cease to exist!” he added.
According to Peng Dinggui, an analyst at Zhongtai Futures Co., a sudden reversal of the earlier aluminium market boom was also driven by record Chinese exports and the risky flow through the Strait of Hormuz to replenish aluminium oxide stocks.
“Premiums for Chinese supplies fell sharply after the announcement of ceasefire agreements, indicating that supply is no longer as constrained,” he said.
“The sudden drop in aluminium prices surprised many investors. It creates a certain panic in the market. Some Chinese investors expect further price drops,” he added.
Demand prospects also worsened due to expectations that the Federal Reserve will be forced to keep higher interest rates for longer to curb inflation.
Additionally, aluminium, like other metals, felt the effects of a sudden strengthening of the U.S. dollar since mid‑May.
We wrote more about this in the article: The dollar rate under Fed policy pressure. Inflation surprise is just the beginning? It may shake USD/PLN and EUR/USD.
Source: Bloomberg.
See also: Gold price will drop by several percent. Banks revise forecasts. Risk of further XAU/USD correction exists.
Metal price at historic discount
On Tuesday, June 30, the aluminium price at the London Metal Exchange stood at 3,118 USD per tonne (+0.59%).
Read also: Fuel prices crashed due to Trump. Attack on Iran canceled! “I was asked.”
Chart. Aluminium price
Source: Bloomberg.
Read also: Fuel prices plunged after Trump’s words. Attacks on Iran were halted. “I instructed the Department of War.”
See also: Gold price fell 12%, soon further discount? Expert: “With possible de-escalation there is a chance to recover losses.”
Sources: Bloomberg, Axios, Truth Social.
