Aluminum hits seven-week high as Hormuz talks stall

Aluminum advanced for a seventh consecutive day on Monday, climbing to its highest level in seven weeks as fading prospects for a quick resolution to the Strait of Hormuz standoff fueled concerns over prolonged supply disruptions from the Middle East.

Diplomatic Impasse Deepens

Futures on the London Metal Exchange rose as much as 1% to the highest level since June 23, according to Bloomberg. The rally came after President Donald Trump on Monday laid out new demands on Iran, including compensation for people killed by Tehran — conditions widely seen as likely to be rejected by the Islamic republic.bloomberg

The demands followed Iran's own set of conditions issued over the weekend. Iran's Supreme National Security Council said the Strait of Hormuz would not reopen until the United States "corrects its behavior," requiring Washington to end its war on Iran, withdraw military forces, lift sanctions, unfreeze Iranian assets, and compensate for war damage. The hardening of positions on both sides came just days after an AP report suggested a deal was close, with Iranian and Omani negotiators said to have finalized a draft agreement awaiting approval from Iran's Supreme Leader.today+3

Market Deficit Persists

The conflict has already removed roughly three million tonnes of aluminum supply from the global market in 2026, according to Hong Leong Investment Bank. The research house said the aluminum market is "likely to remain in deficit" throughout the year as smelters in Bahrain and the United Arab Emirates continue to operate at reduced capacity due to the near-total disruption of raw material shipments through the Persian Gulf.theedgemalaysia

The Main Japanese Port premium — the extra cost on top of the LME price for physical delivery — remained at around $350 per tonne in the third quarter, its highest level in over a decade, reflecting continued tightness in the physical market.theedgemalaysia

Broader Supply Picture

The Middle East accounts for nearly 10% of global aluminum production, with smelters in the region playing an outsized role in supplying specialized products for the automotive, construction, and aerospace industries. Oman has become a crucial logistics hub where ships unload alumina for overland transport to regional smelters, but full restoration of production remains unlikely while shipping through the strait stays restricted.vietnam

While geopolitical tensions remain volatile, Hong Leong Investment noted that aluminum prices are unlikely to surge further as the market increasingly prices in a surplus for 2027, with new supply from Indonesia and India alongside eventual resumptions at Middle Eastern smelters.theedgemalaysia