Aluminum Prices Retreat from 4-Year Highs

Aluminum futures in the UK fell to below $3,600 per tonne, pulling back from a more than four-year high, as expectations of increased exports from China, the world’s largest aluminum producer, helped ease concerns over ongoing disruptions in the Persian Gulf. Chinese firms have signaled their readiness to step in with alternative supplies for overseas customers, as the war in the Middle East has constrained shipments from a region that accounts for roughly 9% of global output. Exports from the region have been significantly affected following the closure of the Strait of Hormuz in late February. The situation worsened after Iranian attacks hit two major regional smelters, with Emirates Global Aluminium, the region’s biggest producer, halting operations at its Al Taweelah plant.

Aluminum futures in the UK climbed to around $3,630 per tonne in April, the highest level since March 2022, amid uncertainty across metal markets following a US blockade of Iranian ports in the Strait of Hormuz. While metals generally face downside risks from expectations of weakening demand, as surging energy prices threaten to slow global economic growth, aluminum has diverged from this trend due to supply disruptions. The Gulf region is a key supplier of primary aluminum, accounting for roughly 9% of global output, but shipments have been severely disrupted by the Strait’s closure in late February. The situation worsened after Iran targeted two regional smelters, with Emirates Global Aluminium, the region’s largest producer, halting operations at its Al Taweelah plant. Stress in the market was clearly reflected in the widening backwardation on the London Metal Exchange.

Aluminum increased to 3544.00 USD/T, the highest since March 2022. Over the past 4 weeks, Aluminum gained 1.89%, and in the last 12 months, it increased 46.19%.