Alcoa draws new aluminum orders as Gulf states curb production

Alcoa Corp., the largest US aluminum producer, says it’s fielding interest from buyers seeking alternative supply following the curtailment of production in the Middle East. 

“We’re actually seeing an uptick in orders from customers, and inquiries related to the second quarter and second half of the year, because these were customers who take a portion or a majority of supply from Middle East smelters,” said Chief Financial Officer Molly Beerman at a JPMorgan Chase & Co. conference on Tuesday. “So we do have additional spot orders coming in, and that should help us later in the year.”

Aluminum buyers are looking to find different sources of material while shipping through the Strait of Hormuz is effectively closed. Smelters in the Gulf states, which produce about 9% of global supply, curtailed production last week and over the weekend to conserve raw materials. 

Alcoa, which is also a major producer of alumina, ships about four million metric tons of the raw material to the Middle East to power its smelters every year, according to Beerman. Now, following the closing of the Strait of Hormuz, “all of that supply that normally would have moved into the Middle East is finding a home elsewhere,” she said. “Probably moving into China.” 

Prices of the lightweight metal soared to the highest since 2022 last week after the US and Israel began attacks on Iran, but have since pared some gains. The US Midwest premium — an amount added to global benchmarks to deliver aluminum to that region — climbed to a fresh record of $1.10 a pound last week.

(By Jacob Lorinc)