US-Iran war: Aluminum prices climbed to their highest level in nearly four years as the escalating tensions in the Middle East raised concerns about tighter global supply, outweighing the pressure from a stronger dollar.
Benchmark three-month aluminum on the London Metal Exchange touched $3,544 per metric ton earlier in the session — its highest level since March 31, 2022.
Meanwhile, the most-active aluminum contract on the Shanghai Futures Exchange jumped 3.29% to 25,310 yuan ($3,658.15) per ton, after hitting an intraday high of 25,860 yuan — its strongest level since January 30 — earlier in the session.
Back home, aluminum prices on Multi Commodity Exchange (MCX) rose nearly 3% to ₹350.90 per kg on Monday.
Whereas, safe-haven bullion — gold and silver prices — witnessed a sharp decline of up to 3.5% despite escalating tensions in the Middle East.
What’s driving aluminum prices today?
The war involving the US and Israel against Iran has disrupted shipping through the Strait of Hormuz, a vital Gulf waterway responsible for roughly 9% of global aluminum production, according to a reuters report.
The lightweight metal, widely used in construction and packaging, recorded its biggest weekly gain since January 2023 last week as supply worries intensified after Qatari smelter Qatalum started curbing production and Aluminum Bahrain declared force majeure on shipments.
Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, said that the global aluminum market was already running tight, and the conflict in West Asia is now exposing just how fragile the supply chain has become.
The region produces roughly 6.5 million tonnes of aluminum annually, or close to 10% of global output, built on cheap energy and proximity to key shipping routes.
“The risk now is twofold. One is logistical — the Strait of Hormuz is a critical chokepoint, and disruptions there can strand metal even if smelters continue operating. The second risk is production itself, because aluminum smelting is extremely energy intensive, and early signs of energy disruptions have already begun to affect operations at some plants,” Banerjee said.
Aluminum prices outlook amid US-Iran war
Ewa Manthey, commodities strategist at ING, was quoted as saying by reuters that the escalating tensions in the Middle East could drive aluminum prices above $4,000 per tonne.
“Extended disruption in the Strait would simultaneously choke aluminum inflows and aluminum exports for Middle Eastern smelters. That would tighten global supply meaningfully,” Manthey said.
Meanwhile, Banerjee of Kotak Securities said that the prices have already begun reflecting this tightening balance, with LME aluminum trading around $3,450 per tonne, and if disruptions persist, it would not be surprising to see prices test the $3,800–$4,000 range.
(With inputs from Reuters)
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