Aluminum, a crucial industrial metal, has become one of the most affected non-oil commodities amid Middle Eastern conflicts. Emirates Global Aluminium reported on the 28th that its facility in Abu Dhabi was attacked by Iran, while Aluminium Bahrain confirmed on the 29th that some of its operations were also targeted. The Middle East is a significant aluminum supplier, accounting for approximately 8% to 9% of global output. The ongoing hostilities have led to substantial production cuts in the region, compounded by disruptions to shipping through the Strait of Hormuz, which has hindered both the import of raw materials and the export of finished products.
Reports indicate that the three-month aluminum contract on the London Metal Exchange has risen by about 10% since the start of the year. Analysts at Citigroup previously predicted that if supply conditions worsen, aluminum prices could climb to $4,000 per ton, significantly higher than the current level of around $3,300. Aluminium Bahrain operates the world's largest single-site aluminum smelter, with an annual capacity of roughly 1.6 million tons. Due to shipping disruptions in the Strait of Hormuz, the company announced over the weekend that it would phase out three production lines, which together account for 19% of its total capacity. This development has driven international aluminum prices to a four-year high.
Additionally, Emirates Global Aluminium, one of the world's largest aluminum producers, also confirmed being targeted by Iran. The global spot market for aluminum has already seen substantial premiums. The premium for aluminum on the London Metal Exchange is around $60 per ton, reaching its highest level in 19 years. Citigroup analysts have raised their three-month aluminum price forecast from $3,400 to $3,600 per ton, suggesting that prices could potentially reach $4,000 per ton if supply conditions deteriorate further.
Analysts note that tightening aluminum supplies could impact advanced manufacturing supply chains, increasing production costs for the automotive, aerospace, and construction industries. Hong Kong-listed aluminum sector stocks include RUSAL (00486), CHALCO (02600), CHINAHONGQIAO (01378), and Innovation Industry (02788).
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