The global metal market is coming to a renewed understanding: aluminum is not merely an industrial metal, but a strategic material highly sensitive to geopolitical dynamics. As the conflict in the Middle East persists and transport through the Strait of Hormuz remains obstructed, aluminum prices continued to climb on March 12, with the LME three-month aluminum price rising to $3,502.50 per ton, nearing a four-year high set earlier this week.
Middle East risks become the core driver of aluminum prices
Aluminum is particularly sensitive to geopolitical news due to the significant increase in the Middle East's share of global supply. Reuters reports that the region now accounts for about 9% of global aluminum supply. Earlier analyses highlighted that over the past two decades, the Gulf region has rapidly expanded its smelting capacity, relying on natural gas resources, becoming one of the most critical aluminum supply centers outside China. As long as the Strait of Hormuz fails to resume normal transit, risk premiums will continue to be added to aluminum prices.
Inventory and premiums indicate a tightening spot market
What deserves more attention is not the futures prices themselves, but the simultaneous tightening of the spot chain. On March 11, Reuters reported that Trafigura plans to withdraw nearly 100,000 tons of aluminum from the LME warehouse in Port Klang to transport to Europe and the USA for contract fulfillment. The rapidly rising cancellation of warrants indicates a reduction in available inventory for free circulation, while soaring premiums in Europe and the USA reflect the increasing difficulty of physical deliveries.
Agencies start adjusting annual price expectations
In this context, Benchmark Mineral Intelligence has raised its aluminum price forecast for 2026 from $2,900 to $3,100 per ton. It's important to note that this forecast is still lower than current spot price levels, suggesting that while agencies acknowledge rising supply risks, they also imply that if shipping or capacity gradually recovers, the extreme tightness in the spot market may not persist throughout the year. This judgment is a deduction based on the discrepancy between the forecast and current prices.
Other metals are not strengthening in tandem
In contrast, the price movements of copper, nickel, lead, tin, and zinc remain more moderate, even weak, indicating that the current upswing resembles more of an "aluminum standalone rally" than a systematic bull market for the entire base metals sector. In other words, the current market driver is not a broad recovery in demand but a direct supply disruption risk specific to a single metal.
