Aluminium posts worst monthly drop since 2008 crisis

Aluminium closed out June with its worst monthly performance since the 2008 financial crisis, as a strengthening U.S. dollar and prospects for resumed Middle Eastern supply pushed the industrial metal sharply lower.

A Month of Steep Losses

The metal fell to around $3,100 per metric ton on the London Metal Exchange on June 30, according to Trading Economics and Investing.com data, down from above $3,750 at the start of the month. The decline of roughly 15% over June wiped out gains that had accumulated during the U.S.-Iran conflict earlier this year, which had disrupted shipments through the Strait of Hormuz and driven prices to four-year highs.tacto+3

The sell-off accelerated in mid-June after the United States and Iran reached an interim agreement that laid the groundwork for reopening the strait to commercial shipping. President Donald Trump said in a social media post that he was authorizing the "toll free opening" of Hormuz, while Iran agreed to allow free transit for 60 days. The Middle East accounts for around 9% of global aluminium production, and the prospect of those supplies returning to market removed a key price support.mining+1

Dollar Pressure Compounds the Decline

A rally in the U.S. Dollar Index compounded the pain for aluminium and other dollar-denominated commodities. The DXY rose to 101.30 on June 30, gaining more than 2% over the month. Strong U.S. economic data — including May nonfarm payrolls of 172,000, well above forecasts — pushed out expectations for Federal Reserve rate cuts and bolstered the greenback.tradingeconomics+2

Industrial metals were "battered earlier in the week when a rising dollar weighed on commodities priced in the currency," according to a report by AEGIS Hedging on June 25. By that date, aluminium had already plunged to its lowest close since February 24.aegis-hedging

Supply Outlook Limits Rebound Hopes

Despite the scale of the drop, analysts cautioned that a full recovery in Middle Eastern supply will take time. S&P Global ↘ 0.38% reported on June 16 that Gulf Cooperation Council aluminium output remained at just 62% of prewar levels, suggesting normalization could stretch over months even as the diplomatic framework takes hold.spglobal

The June jobs report, due Thursday, looms as the next catalyst for dollar direction. Economists forecast an increase of around 100,000 to 110,000 positions, a figure that could either extend or interrupt the greenback's advance depending on how it shapes the Federal Reserve's rate outlook.morningstar+1