Aluminium prices edged lower on news labour unions in Guinea had opted to end a two-and-a-half week strike that had disrupted bauxite exports.

Bauxite is a raw material used in the production of alumina, the raw material used to make aluminium.

At 1.08 pm, LME aluminium for three-month delivery was down at 2,728 usd a tonne against 2,795 usd at the close yesterday.

Newswire reports over the weekend said labour unions in the African state had reached an agreement with the government to end their 18-day strike. Work has since resumed at mines and plants across the country.

BNP Paribas analyst David Thurtell said the news could be pressuring aluminium today.

Overall, however, he remains positive on prospects for the metal.

"(Aluminium) hasn't had the same phenomenal (price) rises as some of the other metals therefore it won't see the same supply response" that is being seen in metals like zinc, nickel and copper, he said.

Producers of these metals are expected to increase their production capacity over the next couple of years in a bid to cash in on historically high prices.

Separately, aluminium continues to benefit from the fact that one market player is still holding a dominant position that could potentially see the withdrawal of nearly all the LME's inventory.

"The situation for aluminium remains constant with a dominant player still very much dictating market movement," said Standard Bank analyst Michael Skinner.

The holder of the dominant position has gone long or placed bets that prices will rise. If he chooses at the next settlement day to close out his positions and take delivery, LME aluminium stocks will be nearly depleted.

On the other hand, if he chooses to roll forward his position, the market will still be tight for the next few months as the player gradually unwinds his position or closes out his bets.

Skinner said it looks as though the 3,000 usd level is within sight for aluminium, but added that previous tests at the level have had limited success.

He noted too that the significant premiums being paid for the cash metal over the three month futures price reflects the the tight supply conditions in the market.

The premium has been standing roughly at around 110 usd a tonne today. Two weeks ago the cash premium for aluminium hit 120 usd – the highest its been since 1990.