LONDON- Aluminum prices fell on Wednesday to their lowest since March 2021 as markets braced for another hefty U.S. interest rate rise that will suppress economic growth.
Rising rates helped boost the dollar to a 20-year high, pressuring dollar-priced metals by making them costlier for buyers with other currencies.
Also lifting the dollar was appetite for safer assets after Russia’s Vladimir Putin escalated the conflict in Ukraine by ordering the mobilization of more troops.
Benchmark aluminum on the London Metal Exchange (LME) was down 1.7 percent at $2,208.50 a ton and down around 21 percent this year.
If the Federal Reserve announces a 0.75 percent rate rise at 1800 GMT, as the market expects, this has been priced in and could boost metals, but a 1 percent increase would likely drive prices lower, said ING analyst Warren Patterson.
Demand for metals is slowing alongside global economic growth but supply is also constrained, Patterson said.
“Fundamentally, for most metals, the price outlook is still supportive. There’s plenty of supply risk and inventories are low.”
High energy costs have forced European aluminum smelters to cut annual production capacity by 1.1 million tons and some Chinese smelters face energy rationing. – Reuters
