Aluminum Approaches 4-Year High

Aluminum futures in the UK rose to $3,550 per tonne, approaching the four-year high of $3,650 on April 16th amid prolonged supply disruptions from the Middle East. The US and Iran exchanged threats and extended their impasse that has halted the flows of commercial vessels in the Persian Gulf. Pre-war supply from Gulf countries were responsible for 9% of global supply and nearly 25% of non-Chinese supply. On top of that, direct attacks on the largest refiners in the region delayed the eventual return of supply from the area, with EGA's flagship plant expected to return to capacity in one year, and Bahrain's ALBA operations being suspended. The resulting surge in natural gas costs also lifted refining costs. Meanwhile, strong manufacturing activity data from China supported the demand backdrop. This was magnified by ample borrowing of special bonds in recent municipal debt auctions for their largest cities, which are commonly used for aluminum-intense infrastructure development.

Aluminum futures in the UK rebounded to $3,530 per tonne from the three-week low of $3,480 on April 29th amid expectations of prolonged supply disruptions from the Middle East. US President Trump signaled that the naval blockade would remain for longer for Iranian commercial vessels leaving the Straight of Hormuz. The move was followed with threats from Iran on tankers and dry bulk cargos in the region that have prevented aluminum shipments from major producers in the Persian Gulf. Pre-war supply from Gulf countries were responsible for 9% of global supply and nearly 25% of non-Chinese supply. On top of that, direct attacks on the largest refiners in the region delayed the eventual return of supply from the area, with EGA's flagship plant expected to return to capacity in one year, and Bahrain's ALBA operations being suspended. The resulting surge in natural gas costs also lifted refining costs. Meanwhile, strong manufacturing activity data from China supported the demand backdrop.

Aluminum futures in the UK rose to around $3,520 per tonne, hovering near a more than four-year high as the continued blockage of the Strait of Hormuz threatens a prolonged disruption to Middle Eastern supply. The key waterway remained closed, with Iran tightening restrictions over the movement of vessels through the shipping route, while the US maintains its own blockade on ships traveling to and from Tehran. The Persian Gulf accounts for roughly 9% of global primary aluminum. Beyond restricting shipping flows, the conflict has also directly affected production capacity. Major refineries in the UAE and Bahrain were damaged after being struck by Iranian attacks. Analysts warned that regional supply constraints could persist for months even if hostilities end and Hormuz reopens, as restoring damaged smelting and refining facilities is expected to take considerable time. Emirates Global Aluminium, the region’s largest producer, said it may take at least a year to fully restore output.