Iran-Israel War Disrupts Aluminum Supply, Prices Spike

Aluminum Hits Nearly Four Year High as Middle East Conflict Disrupts Supply​

Aluminum prices climbed to their highest level in almost four years on Monday as escalating hostilities in the Middle East intensified concerns over supply disruptions from the region. While aluminum advanced sharply, copper and other industrial metals declined as investors reduced exposure to risk assets amid broader market volatility.

Aluminum Surges on Supply Concerns​

On the London Metal Exchange, aluminum rose as much as 1.6 percent to $3,499.50 per ton, marking its highest level since April 2022. The surge follows a nearly 10 percent rally last week as ongoing conflict disrupted shipments from the Persian Gulf.

The region plays a significant role in global aluminum supply, accounting for roughly 9 percent of total production. Market participants are increasingly preparing for potential supply shortages as geopolitical tensions threaten further disruptions.

Shipments Disrupted as Smelters Halt Deliveries​

The conflict has already begun affecting shipments from key production centers. At least two major smelters in the Middle East, one located in Qatar and another in Bahrain, have suspended deliveries due to the worsening situation.

As a result, buyers in the United States are moving quickly to secure alternative aluminum cargoes from Asian suppliers in an attempt to avoid supply shortages.

Other Industrial Metals Decline Amid Risk Aversion​

While aluminum rallied on supply concerns, other industrial metals such as copper moved lower as investors reduced risk exposure. Broader financial markets also declined as geopolitical uncertainty increased.

Crude oil prices surged by about 20 percent on Monday, reflecting fears that the conflict could curb production further and prolong disruptions to global energy supply.

Escalating Conflict Intensifies Market Uncertainty​

The latest developments in the Middle East have heightened concerns across global commodity markets. On Sunday, Iran intensified attacks on neighboring countries, while Israel struck fuel depots in Tehran and warned it could target the country’s power grid.

United States President Donald Trump also indicated that the United States could consider targeting additional locations not previously struck. In a social media post, he stated that the attacks would continue until Iran either surrendered or collapsed.

Market Participants Position for Further Volatility​

According to Gao Yin, an analyst at Shuohe Asset Management Co., a prolonged conflict could place additional pressure on aluminum supply. She noted that many traders are currently buying aluminum while selling other industrial metals in the near term as they reposition portfolios amid rising uncertainty in global markets.