Aluminum Heads for 10% Monthly Surge as Iran War Roils Supplies

Aluminum billets marked "Made in Abu Dhabi UAE" at the Kato Light Metal Industry Co. factory in Kanie, Aichi prefecture, Japan, on Friday, March 27, 2026. Aluminum prices could be driven to record levels as Iran's weekend strikes on Middle Eastern smelters threaten a supply crisis. Photographer: Louise Delmotte/Bloomberg Photo by Louise Delmotte /Bloomberg

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(Bloomberg) — 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.

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The lightweight metal advanced toward $3,500 a ton in London, putting it on course for a monthly gain of 10%. That’s the most since April 2024, and contrasts with a broader downtrend for metals in March.

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Commodities including base metals have been roiled by the conflict between the US, Israel and Iran. Around a 10th of aluminum’s global production is concentrated in the Persian Gulf, with exports curtailed 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.

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While both companies have yet to clarify the precise damage to their facilities, uncertainty remains about the impact on supply-demand balances. 

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Output from EGA’s Al-Taweelah plant, with a capacity of 1.6 million tons a year, can be “written off” for the long term, analyst Bernard Dahdah 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 said. 

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Dahdah’s assessment is based on the assumption that if the plant has suffered “significant” damage, it’s likely that it was forced into an uncontrolled shutdown, he said by phone. That would lead to the solidification of metal in the smelting circuit, which would cause lasting damage that would take at least a year to repair.

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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 heading for monthly declines as the war lifts energy costs and prompts warnings about global economic growth.

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The hostilities in the Middle East have had the biggest direct impact on aluminum because of the region’s role as a major source of primary metal, most of which is exported. The disruptions have sent premiums soaring in other locations, including Japan, while prompting a pickup in orders for products from China, which dominates global output.

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Three-month aluminum was 2% higher at $3,469 a ton on the London Metal Exchange at 11:26 a.m. local time. In other metals, copper was little changed at $12,213 a ton, down more than 8% in March, and on pace for the biggest monthly loss since June 2022.

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