METALS-Aluminium falls as dollar firms; Mideast war underpins weekly gain

(Adds analyst comment, updates prices)

March 13 (Reuters) - Aluminium fell on Friday, snapping a three-day run of gains, as the dollar strengthened on fading prospects for more U.S. rate cuts, although shipping disruption in the war-hit Middle East kept the metal on course for a weekly rise.

Benchmark three-month aluminium on the London Metal Exchange was down 1.7% at $3,458 per metric ton as of 1030 GMT. It was still set to end the week up 0.3% after hitting a nearly four-year high on Thursday, having notched a 10% leap last week. "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 the turmoil in markets left it the last safe-haven standing.

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 how Gulf aluminium producers were grappling with spiking energy prices 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 shortage of available metal. In China, however, Shanghai aluminium stocks rose 5.6% from last week to 416,425 tons, the most since April 2020, while Norsk Hydro (NHYKF) said on Thursday its Qatalum aluminium smelter would keep operating at 60% after announcing a shutdown last week.

The dollar dragged the LME complex down, with copper sliding 1% to $12,871 a ton and heading for a 3.6% weekly dip.

Zinc lost 0.4% to $3,286.50, nickel fell 1.6% to $17,445, tin dropped 3.1% to $47,860 and lead was down 0.6% at $1,929, hitting its lowest since May 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)