Aluminum futures in the UK declined to $3,400 per tonne, nearing a more than two-month low, after an interim peace agreement between the United States and Iran eased supply concerns. The two countries remotely signed a memorandum of understanding to end hostilities and reopen the Strait of Hormuz, enabling the resumption of metal exports from the Persian Gulf, which accounts for roughly 9% of global aluminum output.
Nonetheless, uncertainty persists over how quickly supply chains can normalize, as key Gulf producers are contending with operational disruptions following earlier Iranian attacks. Additional downward pressure on prices stems from rising production in China, the world’s largest aluminum producer, as well as increased supply from smelters in Indonesia.
On the demand side, weak economic data from China has heightened concerns, since the country is also one of the world’s largest consumers of aluminum. Further weighing on prices, the Federal Reserve’s hawkish pause has strengthened the US dollar, making dollar-denominated commodities more expensive for overseas buyers.
