Aluminum Rises to Over 4-Year High

Aluminum futures in the UK rose to $3,690 per tonne, the highest in over four years, amid prolonged supply disruptions from the Middle East. The US struck Iranian targets and dimmed recent expectations that an agreement between both countries could restart vessel flows through the Strait of Hormuz. Their naval blockade has halted exports that were responsible for 9% of global supply of aluminum. 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, Guinea announced controls of bauxite exports starting on June, adding to the tightness. The mismatch drove the LME aluminum curve to backwardation, with cash contracts trading at a $60 premium to the three-month futures.

Aluminum increased to 3676.00 USD/T, the highest since March 2022. Over the past 4 weeks, Aluminum gained 2.2%, and in the last 12 months, it increased 45.16%.

Aluminum futures in the UK rose toward $3,670 per tonne, reaching a more than four-year high 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.