Aluminum price hits four-year high on renewed Middle East supply risks

Aluminum prices soared to their highest point in more than four years on Monday as Middle East supply risks escalated ​after the US and Iran traded military strikes, traders said.

Benchmark aluminum ‌on the London Metal Exchange traded 0.5% higher at $3,685 a metric ton in official rings. Earlier, it touched $3,707.50 to match a level hit on May 26 for its highest point since March ​2022.

The Middle East houses 9% of global smelting capacity for aluminum. The ​closure of the Strait of Hormuz has restricted aluminum exports from the ⁠region and limited imports of the raw materials needed to smelt the metal ​used to manufacture cars, aeroplanes, beer cans and building materials.

Analysts expect a large aluminum ​market deficit this year, with some floating numbers above 2 million tons.

“Aluminum remains the standout story,” Britannia Global Markets said in a note. “The extreme backwardation highlights the severity of the squeeze.”

Backwardation refers ​to the premium for nearby LME aluminum contracts against those along the maturity curve .

The ​premium for the cash aluminum contract over a three-month forward surged to 19-year highs above $100 a ‌ton ⁠on Friday.

Elsewhere, copper prices are ticking up as markets price in tight markets outside the US, which has over the last year sucked in vast amounts of copper due to expectations for tariffs on imports.

The US is expected to decide by late ​June whether to impose ​tariffs on copper ⁠metal imports.

Total copper stocks in warehouses registered with Comex at 640,181 short tons or 580,762 metric tons are up more than ​550% since US President Donald Trump in February last year ​ordered an ⁠investigation of copper import tariffs.

Expectations of weak mine supply growth have also helped reinforce elevated copper prices.

Supporting industrial metals overall was expanding manufacturing activity in top consumer China for the ⁠sixth consecutive ​month.

Copper was up 1.5% at $13,840 a ton, zinc ​gained 1% to $3,576, lead firmed 0.2% to $2,021, tin advanced 2% to $56,590 and nickel was little changed at $19,275.

(By ​Pratima Desai and Dylan Duan; Editing by Thomas Derpinghaus and Shailesh Kuber)