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LONDON - Aluminium prices fell to 17-month lows on Tuesday as a strong dollar and worries over economic growth overshadowed production cuts in Europe.
The dollar was close to 20-year highs, which makes dollar-priced metals costlier for buyers in other currencies.
Pushing it up are an energy crisis in Europe and strict COVID-19 controls in China that have slowed economic activity and hammered the euro and yuan.
Sky-high energy prices in Europe have forced smelters to reduce output - with France's biggest aluminium smelter on Tuesday becoming the latest to cut -- but they also harm other industries, shrinking demand.
Benchmark aluminium on the London Metal Exchange (LME) was down 1% at $2,262 a tonne in official open-outcry trading.
The metal used in construction, transport and packaging is down almost 45% from a high in March and down 19% this year.
Prices are unlikely to recover until the dollar stops rising, said Saxo Bank analyst Ole Hansen.
"Metal consumption should decline, driven by a Europe-led downturn in the months ahead," analysts at Citi said.
But Citi said supply cuts may still push aluminium higher.
Aluminium smelters in Europe have cut capacity by a million tonnes since energy prices began rising in 2021 and analysts are braced for more.
On Tuesday, a source said France's Aluminium Dunkerque would cut production by one-fifth and Norsk Hydro said it would keep a small portion of its capacity in Norway offline after maintenance.
However, aluminium stocks in LME-registered warehouses rose by 31,325 tonnes to 308,375 tonnes on Tuesday, easing supply worries.
LME stocks are down from almost 2 million tonnes in March 2021 but outflows have halted in recent weeks.
In China, meanwhile, the central bank moved to support the yuan and officials signalled a renewed sense of urgency on economic stimulus that should support metals demand.
LME copper was down 0.1% at $7,650 a tonne, zinc fell 1.1% to $3,164, nickel slipped 0.3% to $21,400, lead rose 1.1% to $1,896.50 and tin was down 1% at $21,400.
(Reporting by Peter Hobson; edditional reporting by Mai Nguyen in Hanoi; editing by Susan Fenton and Jason Neely)