Aluminum Eases from 4-Year High

Aluminum futures in the UK fell to $3,600 per tonne from the over-four-year high of $3,790 on June 2nd as dollar strength momentarily offset supply concerns. The latest US jobs report reflected a robust labor market, adding leeway for the Fed to hike rates this year should inflation remain high, and lifting the greenback to pressure dollar-priced commodities. Still, futures were 20% higher year-to-date as the war in the Middle East and its naval blockade on the Persian Gulf halted aluminum supply from the region. 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.

Aluminum futures in the UK climbed above $3,780 per tonne, the highest in more than four years, as the market continued to grapple with supply disruptions. Persistent uncertainty over a US-Iran peace deal that could pave the way for the reopening of the Strait of Hormuz has raised the risk that aluminum exports from the Persian Gulf may remain constrained for longer. Supply risks have been further exacerbated by direct attacks on major refiners in the region. EGA’s flagship smelter is expected to take up to a year to return to full capacity, while operations at Bahrain's ALBA remain partially suspended. Meanwhile, Guinea's stricter controls on bauxite exports have added to concerns over tighter raw material supplies. Stress in the market was also reflected in the premium of cash aluminum over three-month contracts, which surged to 19-year highs. Separately, President Donald Trump signed a proclamation adjusting tariffs on some aluminum and steel derivative products.

Aluminum increased to 3709.00 USD/T, the highest since March 2022. Over the past 4 weeks, Aluminum gained 3.71%, and in the last 12 months, it increased 49.86%.