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Informist, Wednesday, May 6, 2026

MUMBAI – With supply disruptions in the wake of the US-Iran war and the closure of the Strait of Hormuz, the deficit of aluminium availability is likely to widen and reach 2.7 million tonnes in the current calendar year, even as the price of the metal may rise to $3,400 per tonne, according to ANZ Research.

Among many commodities affected by the US-Iran war, aluminium is the most affected one, as the West Asian region accounts for 9% of global primary aluminium output and 20% of supply outside China. With 75% of the region's production capacity relying on alumina and bauxite imports through the Strait of Hormuz, restricted input inflows are increasing the risk of further smelting curtailments, according to ANZ Research.

Attacks on aluminium smelting plants in the region brought down the metal's output by 7% on year to 471 tonnes in March, according to the Gulf Cooperation Council. The strikes on Emirates Global Aluminium's Al Taweelah and ALBA facilities on Mar. 28 resulted in a loss of nearly 1.6 million tonnes of production. "While China is ramping up its output due to favourable margins, a regulatory cap of 45 million tonnes will prevent any significant increase from offsetting these losses," it said in a note.

Overall, nearly 3 million tonnes of aluminium production may be impacted, potentially contracting global production by 1.8% to 72.6 million tonnes in 2026, it said.

The resulting supply disruptions will continue to drive up regional premiums, which is also evident in the most backwardated forward curve since 2007, it noted. The premium on aluminium in Europe since the conflict started has surged 50% to $600 per tonne and further increases are likely given the lack of exports from the Persian Gulf countries, it said.

In the US, Section 232 tariffs have raised the cost of landed aluminium to $5,700 per tonne, prompting Canadian exporters to seek alternative markets.

"Aluminium demand faces economic headwinds if the Strait of Hormuz remains closed and industrial activity decelerates across regions. Supply tightness and rising prices along with higher regional premiums will drive substitution in sectors like packaging and automotive. While structural demand prospects are still in place, demand growth has the potential to slow to 2–2.3% in 2026, down from 3% last year," it said.

"We therefore see supply losses widening the market deficit to 2.7 million tonnes in 2026 and over 1.1 million tonnes in 2027. If the Strait of Hormuz reopens, prices may briefly dip, but renewed restocking by manufacturers should limit any significant downside. We expect the aluminium price to remain skewed to the upside, trading above $3,400 tonne this year," said the release.

At 1215 IST, the three-month aluminium contract on London Metals Exchange traded at $3,588 per tonne, down 0.04% from the previous close.  End

US$1 = INR 95.12

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Abhijit Doshi

Edited by Akul Nishant Akhoury

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