Iran war exposes fragility of Western aluminium market
Tensions linked to the war in Iran are exposing growing fragility in Western aluminium supplies, a metal considered strategic by both the United States and the European Union. The price on the London Metal Exchange has reached $3,418 per ton, the highest level in the past four years, after several major Gulf producers reduced or suspended production.
The main risk concerns the Strait of Hormuz, a crucial chokepoint for a region that produces around 23% of global aluminium outside China. Any prolonged disruption could further worsen an already tense situation.
In recent years, global inventories have significantly declined. By the end of February, warehouses monitored by the LME held 583,000 tons, far below the roughly 3 million tons recorded at the start of the decade. A significant share of the remaining metal is of Russian origin, making it difficult for Western buyers to use because of sanctions.
China, traditionally the market’s “safety valve,” is also slowing production due to government-imposed capacity limits, while Western countries struggle to increase output because of the high energy costs faced by smelters.
The result is a market increasingly sensitive to geopolitical shocks, with more volatile prices for a metal that is essential for industry, infrastructure, and the energy transition.
The article “Iran war exposes fragility of Western aluminium market” published by Reuters is available here.
