Aluminum futures in the UK rebounded to $3,520 per tonne from a three-week low of $3,480 on April 29th, driven by expectations of prolonged supply disruptions from the Middle East. US President Trump signaled that the naval blockade on Iranian commercial vessels leaving the Strait of Hormuz would remain in place for an extended period. In response, Iran issued threats against tankers and dry bulk cargoes in the region, disrupting aluminum shipments from major producers in the Persian Gulf. Before the conflict, Gulf countries accounted for 9% of global aluminum supply and nearly 25% of non-Chinese supply.
Further pressure on supply arose from direct attacks on the region’s largest refiners, delaying any meaningful restoration of output. EGA’s flagship plant is not expected to return to full capacity for another year, while operations at Bahrain’s ALBA have been suspended. The surge in natural gas prices has also driven up refining costs. At the same time, solid manufacturing activity data from China has reinforced the demand outlook for aluminum.
