Aluminum headed for the biggest monthly gain in nearly two years, as the war in the Middle East disrupted supplies and damaged local production facilities, tightening the global market.
The light-weight metal advanced toward $3,500 a ton in London, on course for a monthly gain of 10%. That's the most since April 2024, and bucks a broader downtrend for metals in March.
Commodities including base metals have been roiled by the conflict between the US, Israel and Iran. Around a tenth of aluminum's global production is concentrated in the Persian Gulf, with exports choked off by the closure of the Strait of Hormuz. In addition, Iranian drones and missiles have struck plants run by Aluminium Bahrain BSC and Emirates Global Aluminium PJSC.
While both companies have yet to clarify the precise damage to their facilities, there's speculation on the impact and consequences for market balances.
EGA's Al-Taweelah plant, with capacity of 1.6 million tons a year, can be written off for the long term, analyst Bernard Dadhah at Natixis SA wrote in a note. That could flip the market from a supply surplus of 200,000 tons to a deficit of about 1.3 million tons next year, he wrote, warning of a more severe shortfall if the Bahrain plant had also suffered long-term damage.
Most other metals were flat to slightly higher on Tuesday after the Wall Street Journal reported that US President Donald Trump told aides he's willing to end the US campaign even if the Strait of Hormuz remained largely closed. Still, copper, zinc and nickel are still heading for monthly declines as the war lifts energy costs and prompts warnings about global economic growth.
The hostilities in the Middle East have had the greatest direct impact on aluminum because of the region's role as a major source of primary metal, nearly all of which is exported. The disruptions have sent premiums soaring in other locations, including Japan, while prompting a pick-up in orders for products from China, which dominates global output.
Three-month aluminum was 1.8% higher at $3,461.50 a ton on the London Metal Exchange at 10:44 a.m. in Singapore. In other metals, copper was little changed at $12,242 a ton, down more than 8% in March, and on pace for the biggest monthly loss since June 2022.
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