Aluminum Extends Retreat

Aluminum futures in the UK fell below $3,360 per tonne, extending their retreat from a near four-year high as traders assess demand prospects amid ongoing conflict in the Middle East. Analysts noted that demand from China, the world's largest producer and consumer, still lags the previous year due to higher aluminum prices, even as operating rates among fabricators have picked up following the Lunar New Year holiday. Prices had surged this month after the US-Israeli strikes on Iran led to shutdowns and shipping disruptions in a region responsible for roughly 9% of global supply. Recently, Bahrain’s Alba, the world’s largest single-site aluminum producer, shutdown 19% of its 1.6 million tonne-a-year production capacity, while Qatar also halted part of its production due to natural gas shortages.

Aluminum futures in the UK rose to $3,440 per tonne, near its highest level in almost four years, after Bahrain's Alba cut production amid heightened regional tensions. The world’s largest single-site aluminum producer shut down three production lines, which together account for about 19% of its total annual capacity of 1.6 million tonnes. Alba’s output cuts add to a growing series of supply disruptions that have intensified concerns about potential shortages. The closure of the Strait of Hormuz has restricted exports from the Persian Gulf region, which accounts for about 9% of global aluminum production. Earlier this month, Alba also suspended deliveries, while Qatar halted part of its production due to natural gas shortages. Adding to supply concerns, output from China, the world’s largest aluminum producer, is expected to stall this year after surpassing the government-imposed cap of 45 million tonnes in 2025, a measure aimed to curb overcapacity.

Aluminum futures in the UK fell to around $3,470 per tonne but remained close to its highest level in nearly four years, amid fears of a deeper global supply squeeze. The Iran war has shut the Strait of Hormuz, preventing shipments from the Persian Gulf, which accounts for roughly 9% of global aluminum output. Two major smelters, one in Qatar and another in Bahrain, have been forced to suspend deliveries. Output from China, the world’s largest producer, is unlikely to fully compensate for these disruptions as production is expected to stall this year after surpassing the government-imposed cap of 45 million tonnes in 2025, aimed to curb overcapacity, while its expansion in Indonesia faces challenges from rising energy costs and regulatory hurdles. Reflecting tightening market conditions, Rio Tinto offered aluminum to Japanese buyers at a premium of $350 per tonne for second-quarter deliveries. These supply risks come at a time when demand from emerging industries continues to rise.