Aluminium prices fell to their lowest in more than three months on Thursday, while Shanghai nickel dropped to its lowest in over four months, due to rising output in major producing countries.

The most-traded August aluminium contract on the Shanghai Futures Exchange closed down 0.1% at 19,765 yuan ($2,724.59) a metric ton. The contract had touched its lowest since March 28 at 19,590 yuan earlier in the session.

Three-month aluminium on the London Metal Exchange was up 0.7% at $2,418.50 a ton, as of 0726 GMT. It fell as much as 0.3% earlier in the session to $2,394, its lowest since April 3.

China's primary aluminium output hit the highest level since at least 2014 in June as producers benefited from higher profit margins thanks to a recent price surge, as well as sufficient hydropower supply in Yunnan.

LME aluminium surged nearly 30% in three months to a two-year high at end-May.

"China's aluminium production... is likely to be strong in the short-term with improving hydropower generation," said ANZ analyst Soni Kumari, adding that prices could find support at around $2,300-$2,350 level on restocking in the second half.

The discount of LME cash aluminium to the three-month contract was at $58.54 a ton on Wednesday, hovering near the 24-year high of $65.07, suggesting abundant near-term supply.

SHFE aluminium inventories rose to 262,200 tons, the highest since April 2023.

LME copper eased 0.1% to $9,625 a ton, zinc fell 0.7% to $2,829, lead edged up 0.3% at $2,197, tin declined 0.4% to $32,815, and nickel rose 0.2% to $16,495.

SHFE copper fell 0.3% to 78,380 yuan a ton, nickel dropped 1.5% to 130,740 yuan, zinc declined 1.1% to 23,690 yuan, tin shed 2.2% to 267,080 yuan, while lead rose 0.8% to 19,965 yuan.

SHFE nickel earlier in the session touched 129,890 yuan, the lowest since Feb. 21.

"Nickel is under pressure due to weak demand amid the ongoing destocking in the battery market and strong supply from Indonesia," said ANZ's Kumari.

"More supply cuts will be in the offing to rebalance the market, if prices remain in the range of $16,000-$16,500 a ton."

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(Reporting by Mai Nguyen in Hanoi; Editing by Varun H K, Mrigank Dhaniwala and Subhranshu Sahu)