Global supply shortage raises alarm! A gap of 1.3 million tons could reshape the market, with aluminum prices skyrocketing by 10% in just one month.

Notice that due to the disruption of supply and the destruction of local production facilities caused by the Middle East wars, global market supply is tightening, and aluminum prices are heading towards the largest monthly increase in nearly two years. The price of this light metal in the London market is approaching $3,500 per ton, with an expected increase of 10% this month. This will be the largest monthly increase since April 2024, reversing the overall downward trend in the metal market in March. War has impacted the supply in major aluminum-producing regions Commodities, including base metals, have been affected by the conflict between the United States, Israel, and Iran. Approximately one-tenth of the global aluminum production is concentrated in the Persian Gulf region, and exports have been cut off with the closure of the Strait of Hormuz. In addition, Iran's drones and missiles have attacked factories operated by Bahrain Aluminum and Emirates Global Aluminum (EGA). Although the specific extent of the damage to their facilities by these two companies has not yet been clarified, the market has begun to speculate on their impact and the consequences for market balance. Bernard Dada, an analyst at the French Foreign Trade Bank, wrote in a report that EGA's Al Taweelah plant with an annual capacity of 1.6 million tons could be considered permanently scrapped. He wrote that this could shift the market from a 200,000-ton oversupply next year to a shortage of about 1.3 million tons and warned that if the Bahraini plant also suffers long-term damage, the shortage would be more severe. On Tuesday, US President Trump told aides that he would be willing to end US military action even if the Strait of Hormuz remained closed, with most other metal prices remaining stable or slightly rising. However, due to the war's impact on energy costs and concerns about global economic growth, copper, zinc, and nickel are still trending downward this month. Hostile actions in the Middle East have had the most direct impact on aluminum because the region is a major source of primary aluminum and almost all of it is used for export. Supply interruptions have led to skyrocketing premiums in other regions, including Japan, and have also led to increased orders from China, the world's largest producer of aluminum. At the time of writing, aluminum for three-month delivery on the London Metal Exchange (LME) rose 1.8% to $3,461.50 per ton. In other metals, copper prices remained stable, at $12,242 per ton, with a drop of more than 8% in March, heading towards the largest monthly decline since June 2022.