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| Aluminum prices |
Middle East Conflict Drives Aluminum Market Rally
Aluminum prices climbed sharply as Middle East supply disruptions limited output. Three-month London Metal Exchange futures rose above $3,400 per tonne, nearing a four-year high. Consequently, aluminum extended weekly gains to 4%, fueled by geopolitical tensions and regional production closures.
The Strait of Hormuz closure affected 9% of global aluminum output. Smelters in Qatar and Bahrain declared force majeure, restricting exports of finished metal products. Meanwhile, Rio Tinto offered Japanese buyers a $350 per tonne premium for second-quarter shipments, marking the highest regional premium since 2015. Rising European and US premiums, plus higher freight and insurance costs, reinforced this pricing trend.
In contrast, Chinese aluminum exports remain resilient due to rising demand from emerging industries such as AI and solar panels. Shanghai Futures Exchange premiums also reached the highest levels since April 2022. As a result, Chinese exports could offset some tightness, influencing regional price dynamics and global supply balances.
ScrapInsight Commentary
Middle East supply disruptions and elevated premiums push aluminum prices toward multi-year highs. Asia, especially Japan, faces rising costs, while Chinese exports provide partial relief. Market tightness may sustain high premiums in the near term.
