Strait blockade triggers chain reaction, aluminum prices soar to four-year high

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The United States announced a blockade of the Strait of Hormuz, worsening the already tight aluminum supply due to the Middle East war. Aluminum prices immediately jumped to their highest level in four years, and the spot premium surged to its highest point in nearly twenty years.

According to CCTV International News, after arriving at Andrews Air Force Base in Maryland aboard the Air Force One, U.S. President Trump told the media that the U.S. military would blockade Iran at 10 a.m. Eastern Time on April 13, which is 10 p.m. tonight Beijing Time.

After the news was released, aluminum prices on the London Metal Exchange (LME) rose over 2% at one point, reigniting the rally previously driven by supply shortages. Aluminum prices were quoted at $3,550.50 per ton, with the gain narrowing to 1.49%.

This blockade has sharply increased market concerns about disruptions to Middle East aluminum supplies. The Middle East accounts for about 9% of global aluminum production. Emirates Global Aluminium PJSC, the region’s largest aluminum producer, previously shut down one of its smelters due to an Iranian attack and invoked force majeure clauses for some deliveries.

Spot Premium Surges, Market Supply Pressure Evident

The most direct manifestation of pressure in the aluminum market is the significant expansion of the spot contract premium relative to the three-month futures contract on the LME. This price difference jumped 37% from last Friday to $91.50 per ton, the highest level since 2007, showing buyers are scrambling for immediate delivery and competition for near-term supply has intensified.

Contrasting with the strength in aluminum prices, other major metals mostly performed flat or even weakened. Negotiations between the U.S. and Iran in Pakistan over the weekend ended fruitlessly, dispelling the previously optimistic outlook that briefly boosted market sentiment. Copper prices rose slightly by 0.1% to $12,857 per ton, zinc prices fell slightly by 0.1%, and iron ore futures in Singapore rose 0.8%.

Surging energy prices are weighing on the global economy, and the commodity metals market overall faces pressure from weakening demand. The fundamental reason why aluminum prices are rising against the trend is supply contraction caused by the war, not demand-side impetus. This structural difference has caused aluminum to forge an independent trend in the current market environment.

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