Aluminum Drops Further

Aluminum futures in the UK dropped further to $3,350 per tonne, the lowest since March 27, amid easing supply risks and persistent demand concerns. The US and Iran have agreed on a framework to end their three-month conflict, with the Strait of Hormuz expected to reopen after the agreement is formally signed on June 19. The reopening of the waterway would resume metal exports from the Persian Gulf, which accounts for roughly 9% of global aluminum production. However, uncertainty remains over how quickly supply chains can normalize, particularly as key Gulf producers faced operational challenges following earlier Iranian attacks. Additional downside risks come from rising output in China, the world’s largest producer, as well as increasing supply from smelters in Indonesia. At the same time, disappointing economic data from China has raised fresh concerns about global demand, given that the country is also one of the biggest importers of the metal.

Aluminum decreased 5% to 3365.9 USD/T

Aluminum futures in the UK fell to $3,450 per tonne, hitting an over two-month low as supply concerns eased following a US-Iran deal that could lead to the resumption of metal exports from the Persian Gulf. The two countries agreed on a framework to end their war, remove the US blockade of Iranian ports, and reopen the Strait of Hurmuz, with a formal signing ceremony scheduled for June 19 in Switzerland. The Persian Gulf is a significant hub for global aluminum production, accounting for roughly 9% of the world's primary output. However, uncertainty remains over how quickly regional supply flows can resume, particularly as key Gulf producers faced operational challenges following Iranian attacks during the first month of the war. EGA’s flagship smelter is expected to take up to a year to return to full capacity, while Bahrain’s ALBA is still operating below normal levels. Tighter restrictions on bauxite exports from Guinea have added to concerns about raw material availability.