Aluminum Prices Plunge Over 15% in June, Marking Largest Monthly Drop Since 2008
Miles Bennett
LME aluminium fell 15.4% in June, its steepest monthly decline since October 2008; a US-Iran interim ceasefire flipped Middle East supply expectations overnight, erasing nearly all of the geopolitical premium built over three months.
Why did aluminium give back a whole quarter's gains in one month?
The trigger was a US-Iran interim ceasefire, which raised expectations that the Strait of Hormuz would reopen and Middle East aluminium supply — roughly one-tenth of global output — would resume.
This means → the "supply-disruption premium" that conflict had built up lost its foundation; three months of gains were wiped out almost overnight.
Two forces accelerated the reversal: China's aluminium exports hit a record high, and vessels began transiting the strait to replenish alumina stockpiles.
What is the market structure saying?
Over the past two weeks aluminium has shifted into a contango structure — near-month contracts trading below far-month contracts. In plain terms = the market no longer sees an immediate shortage; future aluminium is priced higher than today's.
Zhongtai Futures analyst Peng Dinggui noted: "After the ceasefire announcement, aluminium premiums outside China dropped quickly — supply is simply not as tight anymore."
He added that the sharp decline caught many investors off guard, triggering panic selling. Some Chinese investors now expect prices to fall further.
How did a stronger dollar add pressure?
The dollar has strengthened steadily since mid-May, raising the cost of dollar-denominated aluminium for buyers using other currencies.
Markets expect the Fed to keep rates higher for longer — and possibly hike further to curb inflation.
This means → aluminium faces a two-sided squeeze: supply returning on one side, demand tightening on the other. Both vectors push prices down.
How did other metals fare?
Copper rose 0.4% on the day to $13,332 per tonne but still fell 2.2% for June.
Zinc gained 0.2% to $3,482 per tonne, partly supported by a Beijing Antaike report showing major Chinese smelters plan to cut 600,000–1,000,000 tonnes of zinc concentrate usage this year. Refined zinc output could drop by roughly 200,000–300,000 tonnes — about 4% of China's total production last year.
However, Zijin Tianfeng Futures analyst Liu Xiaoyi noted this reduction is not enough to reverse China's domestic zinc oversupply this year.
What to watch next?
Whether aluminium stabilises hinges on two variables: the actual pace of Middle East supply recovery and the durability of China's export surge.
In plain terms = the ceasefire improved *expectations*, but physical cargo takes time to reach the market; how long China sustains record exports is equally uncertain.
If both factors exceed expectations, the current contango structure will deepen further and a quick recovery in price levels becomes unlikely.
Content is for reference only, not financial advice.