Aluminum prices hit 4-year high on Hormuz supply woes

Aluminum prices surged to their highest level in more than four years on Tuesday, hitting $3,707.50 per ton, as a collapse in negotiations between the United States and Iran raised concerns of a prolonged disruption in the Strait of Hormuz.

Strikes on key smelters in the United Arab Emirates (UAE) and Bahrain amid the Iran conflict have dented production in the Gulf region, which accounts for about 9% of global primary aluminum supply. Aluminum production is highly dependent on low-cost electricity, and abundant natural gas has allowed Gulf states to build some of the world's largest smelters.

“The Middle East is on track to lose up to 3.5 million tons of aluminum production in 2026, and the gap left behind is too large for the rest of the world to fill,” Wood Mackenzie analyst Charvi Trivedi said in a note last week. 

Major exporters

Aluminum prices had already been climbing since April 2025 amid tightening supplies, highlighting the Gulf region's growing importance to global markets. Bahrain, Qatar, Saudi Arabia and the UAE have become major exporters over the past two decades, with much of their metal shipped through the narrow waterway linking the Persian Gulf to the Arabian Sea.

Last month, commodity trading giant Trafigura began talks with Egyptian state-owned producers about building a new aluminum smelter. The proposal to potentially build a 300,000-tonne-per-year primary aluminum smelter and anode plant at Egyptalum’s Nag Hammadi complex highlights growing interest in diversifying aluminum supply outside the Gulf region.

More trouble ahead?

The aluminum market could tighten further if disruptions to gas supplies, power generation or port operations persist.

The price surge also comes as manufacturers in Europe and the United States continue to rely heavily on imported aluminum after years of smelter closures tied to high energy costs, especially in Europe, while Canadian aluminum smelters operate competitively. An extended crisis in the Gulf could reverberate far beyond the Middle East, affecting supply chains for automobiles, aerospace, construction and packaging industries.

Aluminum also risks becoming one of the industrial commodities most exposed to the conflict. Prices are already approaching the highs reached in February 2022 when Russia invaded Ukraine. Aluminum hit an all-time high of $4,073 per ton in March 2022.