Aluminum Drops to 1-Month Low

Aluminum futures in the UK fell below $3,500 per tonne, the lowest in a month, as persistent tensions in the Middle East and prospects of higher US interest rates weighed on the demand outlook. Oil prices rebounded after the US launched new attacks on Iran, fueling inflation concerns and increasing the likelihood of tighter monetary policy, which could slow global growth and dampen demand for industrial metals. Despite the decline, prices remain 19% higher year-to-date, supported by tightening supply conditions as dual blockades in the Strait of Hormuz continue to restrict aluminum exports from the Persian Gulf, which accounts for 9% of global production. Supply risks have been further exacerbated by direct attacks on major facilities 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 facility remain partially suspended.

Aluminum decreased to 3545.00 USD/T, the lowest since May 2026. Over the past 4 weeks, Aluminum lost 0.86%, and in the last 12 months, it increased 42.34%.

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.