METALS-Aluminium falls as dollar firms; Mideast supply in focus

(Updates prices)

March 13 (Reuters) - Aluminium fell sharply on Friday, snapping three days of gains, as the dollar strengthened, although shipping disruptions amid the ongoing Middle East war kept the market on edge.

Benchmark three-month aluminium on the London Metal Exchange was down 2.3% at $3,436.50 per metric ton as of 1700 GMT. It was set to end the week down 0.3% despite hitting a nearly four-year high on Thursday. The metal notched a 10% leap last week on concerns over supplies from Gulf smelters.

"The biggest moving part there is the dollar," said Panmure Liberum analyst Tom Price. The greenback rose to a more than three-month high on Friday as market turmoil left it as the last standing safe-haven.

A stronger dollar makes dollar-denominated metals more expensive for holders of other currencies.

"But the brand new fundamental driver... hasn't changed," Price added, noting that Gulf aluminium producers were grappling spiking energy costs and struggling to get hold of raw materials.

"Even if they did, they can't ship it out. It's a nightmare. So basically about 2 to 3 million tons of capacity is at risk. There's no short-term solution to that," Price said. The world produced 73.8 million tons of primary aluminium last year.

LME aluminium stocks slipped to 445,300 tons, the lowest since July. The spread between the cash LME aluminium contract and the three-month forward was last in a $29 a ton backwardation, pointing to a need for near-term metal.

In China, Shanghai Futures Exchange aluminium stocks rose 5.6% from last week to 416,425 tons, the most since April 2020.

The stronger dollar dragged the entire LME complex lower, with copper, pressured by macroeconomic demand concerns, sliding 1.8% to $12,767 a ton and heading for a third straight daily loss.

Nickel fell 2.7% to $17,255, tin dropped 4.4% to $47,080, zinc dipped 0.3% to $3,291.50 and lead lost 1.7% to $1,906, after hitting its lowest since April 2025. (Reporting by Tom Daly; additional reporting by Dylan Duan in Shanghai, Amy Lv and Lewis Jackson in Beijing; Editing by Sonia Cheema, Kirsten Donovan and Diti Pujara)