LONDON- Aluminum prices end the week around 4 percent lower as fears of rapid US interest rate hikes dampened the outlook for economic growth and metals demand.
Prices, however, rose on Friday after the Wall Street Journal reported that some Fed officials may wish to slow the pace of rate increases soon, lifting stock markets and weakening the dollar.
Earlier in the day, US 10-year bond yields hit their highest since 2007 and China’s yuan fell to its weakest against the dollar since 2008, making dollar-priced metals costlier for buyers in the biggest metals-consuming country.
Ample supply kept aluminum under pressure, with the delivery of around 250,000 tons into the London Metal Exchange’s (LME) warehouse system in the last 10 days.
Even though around 200,000 tons were earmarked for shipment out of the LME system, cash aluminum still traded at a discount to the three-month contract, suggesting that plenty of metal was available.
Benchmark LME three-month aluminum was up 0.4 percent at $2,218 a ton.
Prices of the metal used in packaging, transport and construction have fallen around 45 percent from a peak in March as COVID-19 lockdowns in China and rapid interest rate hikes in the United States and elsewhere weakened the global economy.
“Again, fears of interest rate rises dampened risk appetite,” a China-based futures trader said. “But the tight supply and solid demand could prevent it from any sharp fall.”
Analysts at Goldman Sachs said: “The drivers of the stronger dollar — weak Chinese property and European industry — are also the drivers of micro headwinds to metals’ end-demand.”
