METALS-Aluminium, copper resume downside as Iran war intensifies, more troops deployed?

(Recasts with move lower, updates prices at 1515 GMT)

By Eric Onstad

LONDON, March 20 (Reuters) - Aluminium and copper prices extended losses on Friday after news that the U.S. was sending thousands of more troops to the Middle East boosted the dollar and fuelled worries that a prolonged conflict and surging oil prices will hurt economic growth and metals demand. U.S. officials told Reuters on Friday that the United States military is deploying thousands of additional Marines and sailors to the Middle East. "Base metals were seeing a measure of stability earlier in Friday's US session, but the selling has returned," Marex analyst Ed Meir said in a note.

Benchmark three-month aluminium on the London Metal Exchange gave up earlier modest gains, sliding 2% to $3,187 a metric ton by 1515 GMT.

It closed down 4.4% in the previous session, after sliding as much as 8.4% as speculators scrambled to liquidate positions. Aluminium prices had rallied in recent weeks on fears of supply disruptions after the U.S. and Israel attacked Iran. The Gulf accounts for 8% of global production.

Aluminium Bahrain said on Thursday it is exporting metal via the Saudi port of Jeddah as the Strait of Hormuz remains effectively shut.

High oil prices, however, spur inflation, erode global economic growth and dampen metals demand.

"That combination has traders balancing the risk of regional supply disruption against the risk that higher energy prices will slow manufacturing demand," said Neil Welsh, head of metals at broker Britannia Global Markets.

The dollar index strengthened after news about the deployment of more troops, making commodities priced in the U.S. currency more expensive for buyers using other currencies.

LME copper slumped 2% to $11,917 a ton. It was headed for a 7% weekly loss, the biggest since April 2025.

The most active copper contract on the Shanghai Futures Exchange ended daytime trading 1.1% lower at 94,780 yuan ($13,751.18), down 6.1% for the week.

Copper has been weighed down by rising inventories and data showed on Friday that LME stocks in the U.S. gained another 4,725 tons to 98,675, their highest since February 2019.

Among other metals, LME zinc shed 0.8% to $3,046 a ton, nickel dipped 0.1% to $16,975 and tin dropped 0.7% to $43,240 while lead added 0.3% to $1,894.

($1 = 6.8925 Chinese yuan renminbi) (Reporting by Eric Onstad; Additional Reporting by Tom Daly in London, Lewis Jackson in Beijing and Dylan Duan in Shanghai; Editing by Leroy Leo)