Aluminium prices dropped to a six-month low on Monday as fears of further lockdowns in top consumer China, inflation and higher interest rates triggered a sell-off, although dwindling inventories provided some support.

Benchmark aluminium on the London Metal Exchange (LME) traded down 2.8 at $2,605 tonne in official rings having earlier touched $2,595, the lowest level since Dec. 15.

"The landscape looks rather depressing... elevated inflation, the ongoing war in Ukraine, stubborn energy prices and a Chinese government that is keeping the country's growth bottled up," said Edward Meir, analyst at ED&F Man Capital Markets.

COVID: Authorities in Beijing raced to contain a COVID-19 outbreak traced to a 24-hour bar, with millions facing mandatory testing and thousands under targeted lockdowns.

INFLATION: Soaring inflation around the world, partly to do with higher energy costs, means consumers are likely to cut back on purchases of white goods, which will undermine demand for industrial metals. Russia's invasion of Ukraine has seen oil prices rise more than 50% since January. Central banks hiking interest rates to rein in inflation also means consumer belt-tightening and damage to demand. The U.S. Federal Reserve is expected to raise rates this week, with some forecasting a 75-basis-point hike.

INVENTORIES: Aluminium stocks in LME registered warehouses at 21-year lows of 423,975 tonnes compare with numbers near two million tonnes in March 2021. Stocks in warehouses monitored by the Shanghai Futures Exchange at 269,583 tonnes have dropped more than 20% since the middle of March. Traders say the aluminium market in China was quiet due to a probe into the fraudulent use of inventories to raise finance. The investigation involves three Shanghai-based firms suspected of having pledged aluminium stocks several times over, the state-backed Securities Times reported.

DOLLAR: Weighing on industrial metals is the higher U.S. currency, which when it rises makes dollar-priced commodities more expensive for holders of other currencies.

OTHER METALS: Copper was down 1.7 at $9,283, zinc slipped 2.9% to $3,587, lead ceded 1.8% to $2,110, tin fell 2.7% to $34,300 and nickel lost 2.9% to $26,475 a tonne.

(Reporting by Pratima Desai; additional reporting by Brijesh Patel; Editing by Kirsten Donovan and Amy Caren Daniel)