Middle East Conflict "Chokes" Supply Chain; London Aluminum Prices Surge for Nearly Three Weeks, Leading Industrial Metals

The military strikes by the United States and Israel against Iran have disrupted aluminum supplies in the Middle East, pushing up international oil prices and significantly increasing the prices of this industrial metal.

Aluminum is vital to the global economy; it is a key material in electronics, transportation, construction, and is also widely used in solar panels, packaging, and other fields.

On February 28, the US and Israel launched large-scale military operations against Iran. Iran responded with ballistic missiles and drones targeting Israel and US military bases in the Middle East, affecting some Middle Eastern countries.

Since then, three-month aluminum futures on the London Metal Exchange (LME) have risen by as much as 10%, later retreating to about 8%, making it one of the best-performing industrial metals.

As of Wednesday (March 18) European trading hours, aluminum prices hovered around $3,400 per ton, nearing a four-year high.

It is reported that the UAE’s largest aluminum producer, Emirates Global Aluminium (EGA), has smelters in Dubai and Abu Dhabi, while Bahrain Aluminum (Alba) operates one of the world’s largest single-site smelters.

Previously, Alba announced a 19% reduction in its annual production of 1.6 million tons. Data shows that the region accounts for about 9% of global aluminum capacity, and major producers rely on the Strait of Hormuz to import bauxite and export metal.

Metal intelligence firm CRU Group states that declining global inventories and potential further disruptions in Middle Eastern supply could push aluminum prices to $4,000 per ton.

CRU’s chief analyst Guillaume Osouf wrote in a recent article that, absent weak global demand, aluminum prices in London might be higher.

He added, “If the conflict continues, considering its long-term impact on global supply and the potential negative effects on demand, the market outlook for the year could change significantly.”

Despite recent price increases, analysts generally believe aluminum will not become a major trading target for retail investors like silver and copper.

Artem Volynets, CEO of mining company ACG Metals, said he was “surprised” to see retail investors participating in this industrial metal trading.

CRU’s Osouf noted that current long positions are only slightly below levels at the end of January, indicating limited capital participation since the conflict erupted.

He also added, “Interestingly, short positions have increased by 15,000 lots, suggesting more investors are betting on future price declines.”

(Source: Cailian Press)