Column: Warning lights flash as aluminum reels from Gulf shock

Mining05-25

(The opinions expressed here are those of Andy Home, a columnist for Reuters.) The Iran war is shaping up to be one of the biggest supply shocks in the history of the aluminum market. Gulf production ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nColumn: Warning lights flash as aluminum reels from Gulf shock\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-05-25 11:22 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.mining.com/web/column-warning-lights-flash-as-aluminum-reels-from-gulf-shock/><strong>Mining</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>(The opinions expressed here are those of Andy Home, a columnist for Reuters.)\nThe Iran war is shaping up to be one of the biggest supply shocks in the history of the aluminum market.\nGulf production ...</p>\n\n<a href=\"https://www.mining.com/web/column-warning-lights-flash-as-aluminum-reels-from-gulf-shock/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4582","symbol_name":"ESG ETF-MSCI","start_time":0,"source_url":"https://www.mining.com/web/column-warning-lights-flash-as-aluminum-reels-from-gulf-shock/","article_id":"2638055705","we_media_id":null,"thumbnails":["https://www.mining.com/wp-content/uploads/2026/05/AdobeStock_506134108-scaled-e1779733318594.jpeg"],"rights":{"source":"mining_highlight","url":"https://www.mining.com/web/column-warning-lights-flash-as-aluminum-reels-from-gulf-shock/","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2638055705","pubTimestamp":1779679320,"columns":[],"sourceInfo":{"source_id":"mining_highlight","name":"MINING.COM"},"weMediaInfo":null,"summary":"Gulf production of the metal plummeted to its lowest level in over a decade in…","collect":0,"end_time":0,"defaultTopTitle":"mining.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4582":"ESG ETF-MSCI","IAI":"iShares Dow Jones U.S. Broker De"},"translate_title":"专栏：当铝卷因海湾冲击而下跌时，警示灯闪烁","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"IAI":1},"content_text":"(The opinions expressed here are those of Andy Home, a columnist for Reuters.)\nThe Iran war is shaping up to be one of the biggest supply shocks in the history of the aluminum market.\nGulf production of the metal, which is used across sectors as diverse as transport, packaging and solar panels, plummeted to its lowest level in over a decade in April, according to the International Aluminium Institute (IAI). Regional run-rates dropped by an annualized 2 million metric tons over March and April.\nTwo Gulf aluminum smelters have been damaged in missile ‌strikes. Emirates Global Aluminium’s Al Taweelah plant will take a year to repair. At least one other producer – Qatalum – has reduced capacity.\nThe continued closure of the Strait of Hormuz is causing major logistical problems for those still operating.\n\nAluminum in crisis: War, tariffs and a market running on empty\n\nThe Gulf accounts for over a fifth of non-Chinese production and is a core supplier to buyers in Japan, South Korea, the European Union and the United States.\nThe scale of the supply hit is not obvious from the London Metal Exchange (LME) price , which at $3,650 per ton is up by just 14% since the start of hostilities and has yet to scale the 2022 heights that followed Russia’s invasion of Ukraine.\nBut red lights are flashing on the market dashboard.\n\nLME 3-month aluminum and cash-3s spread\nLME tightens as stocks drain away\nThe first is the sharp tightening in LME time-spreads.\nThe LME’s benchmark cash-to-three-months spread flipped into backwardation in early March and cash is currently trading at an $80 premium, the tightest the market has been since ⁠2007. Back then it was a short-lived squeeze on short position holders. This time around the tightness is persistent and looks structural.\nThat’s because LME stocks, which were already low, have been raided as traders look to fill the supply-chain gaps opening up due to the loss of Gulf production.\nLME registered stocks have fallen by a third to 339,475 tons since the start of the year. The last couple of weeks have seen almost 68,000 tons cancelled in preparation for physical load-out.\nThe residual tonnage left on LME warrant is now largely Russian aluminum being stored at the South Korean port of Gwangyang. That’s no use to either US or European buyers due to sanctions imposed over the Ukraine war.\nThe recent daily drawdowns haven’t been transfers to off-warrant storage. These LME “shadow” stocks have also been draining away and are the lowest they’ve been since the exchange started reporting off-warrant stocks in 2020.\n\nLME registered and off-warrant aluminum stocks\nPhysical premiums surge\nThe second warning sign is the rise in physical premiums around the world.\nThe CME spot premium for Japan has more than doubled to $316 per ton over the LME price since the start of hostilities. Japanese buyers have accepted a premium of $350 for their second-quarter deliveries, which is the highest surcharge in 11 years.\nThe European duty-paid premium has jumped by 58% and the duty-unpaid by 75% since the start of March.\n\nCHART: Copper price, aluminum ‘black hole’ fears lift LME base metals index to record high\n\nThe US Midwest premium has risen by a relatively modest 8% but American buyers were already ‌paying record ⁠numbers to secure physical metal thanks to the impact of 50% import tariffs.\nThese are the most visible manifestations of the Gulf supply shock. Less visible is what is going on in non-exchange-traded segments of the market such as billet, a product used by construction and transport sectors.\nIn Rotterdam, the premium for aluminum extrusion billet has more than doubled to $1,100 over the LME base price, according to price reporting agency Fastmarkets.\nStructural deficit\nThe relative calm of the LME outright price belies a severe tightening of availability along the processing chain.\nWhile LME traders are pricing in the ebb and flow of headlines around the Iran war, physical buyers are paying up just to secure enough metal in a market that is heading towards a structural supply deficit.\nThe loss of production in the Gulf ⁠has been compounded by the closure due to high energy prices of the Mozal smelter in Mozambique.\nThe combined hit has been a 2.4-million-ton drop in Western production over the last two months, according to the IAI’s latest figures. Things may get worse depending on whether those Gulf smelters still producing can source enough raw materials via routes that circumvent the Strait of Hormuz.\n\nEGA sticks to aluminum investment plans despite Iran war\n\nChina’s giant aluminum production base has stepped up production but is now running close to the government’s capacity cap, leaving little room for further significant ⁠upside.\nWhile the country is showing signs of increasing exports in reaction to the Gulf supply hit, these shipments will mostly be in the form of semi-processed products such as strip, foil and bars rather than raw metal.\nInventories, both exchange and non-exchange, can provide some short-term buffer but the longer the Strait of Hormuz remains closed, the thinner that cushion becomes.\nAll of this is a generational shock for a market that has lived with structural oversupply and high inventories ⁠for the last 20 years.\nThe aluminum price isn’t yet reflecting the tectonic changes in the supply chain. Physical buyers, however, already know how much the landscape has changed.\n(Editing by Marguerita Choy)","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"tenantId":"TBGLOBAL","deviceId":"web-server-community-laohu8-v3","version":"4.42.3","shortVersion":"4.42.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2638055705","isCrawlerRequest":true}