(Recasts to lead with aluminium; updates prices; changes
dateline to London)
LONDON, June 17 (Reuters) - Aluminium climbed on Wednesday,
as dip-buying spurred a recovery from the steep drop in prices
at the start of the week, when a U.S.-Iran peace agreement eased
supply fears.
Benchmark three-month aluminium on the London Metal
Exchange was trading up 1.1% at $3,424 per metric ton as of 0941
GMT. The metal had slumped to a 2-1/2 month low of $3,334 in the
previous session, when details of the U.S.-Iran memorandum to
end the war in the Middle East began to emerge.
The conflict forced several smelters in the Gulf region,
which accounts for around 9% of global aluminium capacity, to
cut production and disrupted shipping, propelling aluminium
prices to a near four-year high earlier this month.
"I think it's a bit of bargain hunting," Panmure Liberum
analyst Tom Price said of Wednesday's rebound. "Maybe some
people have got a view that the peace deal isn't going to be as
clean cut as everyone hopes it to be and there's more grief
coming through."
Israel has distanced itself from the latest U.S.-Iran
agreement, adding to the uncertainty.
One aluminium trader said investors were engaging in range
trading, buying the metal when it fell to a low level and
selling when it met upper resistance.
The cash LME aluminium contract was trading at a roughly $4
discount over the three-month forward , tightening from
a $16.50 discount on Tuesday.
The spread had been in a backwardation, where near-term
prices are higher than those for delivery further in the future,
for more than two months before flipping late last week.
Aluminium stocks in LME warehouses are at
316,525 tons, the lowest since September 2022.
Elsewhere, copper added 0.3% to $13,813 per ton on
optimism over the peace deal, its gains capped by expectations
that the U.S. Federal Reserve would keep borrowing costs higher
for longer.
Zinc gained 1.1% to $3,608.50, lead edged down
0.1% to $1,979.50, nickel nudged up 0.2% to $18,035 and
tin added 0.5% to $55,165.