Aluminum futures in the UK retreated to $3,600 per tonne from a more than four-year high of $3,790 on June 2, as a stronger US dollar temporarily offset mounting supply concerns. The latest US jobs report pointed to a resilient labor market, giving the Federal Reserve additional room to raise interest rates this year if inflation stays elevated. That prospect boosted the greenback and weighed on dollar-denominated commodities, including aluminum.
Despite the pullback, aluminum futures remained about 20% higher year-to-date, supported by supply disruptions stemming from the war in the Middle East. The conflict and the resulting naval blockade in the Persian Gulf have effectively halted aluminum exports from the region. Before the war, Gulf producers accounted for roughly 9% of global aluminum supply and nearly 25% of output outside China.
The situation has been exacerbated by direct attacks on the region’s largest refiners, delaying any meaningful recovery in production. EGA’s flagship plant is now expected to return to full capacity only within a year, while operations at Bahrain’s ALBA have been suspended. At the same time, the surge in natural gas prices has driven up refining costs, adding further upward pressure on aluminum prices over the medium term.
