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(Bloomberg) — Aluminum fell from its highest since 2022 — and other metals declined — as mounting concerns over the economic consequences of a prolonged Middle East war dominated sentiment across markets.
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There were few signs of the conflict ending soon, with US President Donald Trump and Iran’s new supreme leader Mojtaba Khamenei both striking defiant tones. While aluminum remains on track for a big weekly gain on supply disruptions, investors also have to reckon with a potential impact on metals demand if soaring energy costs hit the global economy.
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Aluminum was down 1% on the London Metal Exchange by 5:56 a.m. to trade at $3,481.50 a ton. The metal climbed roughly 4% over the previous three sessions. Copper, zinc and nickel also fell.
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The deepening conflict is fueling fears of a stagflationary shock if rocketing energy prices fuel inflation and undercut growth at the same time. Metals including copper have fallen since the war broke out, but aluminum has gained given the Middle East hosts about a tenth of global production.
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Industrial disruptions remain widespread at facilities throughout the Middle East, and commodity shipments through the Strait of Hormuz have all but halted. It remains unclear how much longer the conflict will last.
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“We see risk of more smelter closures” if shipping through the Strait of Hormuz remains restricted for the next few weeks, UBS Group AG analysts led by Lachlan Shaw said in a note. The bank lifted its 2026 aluminum price forecast 13% to $3,250 a ton, citing the potential for war-related interruptions to accelerate already expected tightness in the global market.
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Already, Aluminium Bahrain BSC has declared force majeure to customers due to logistical disruptions. Such disruptions have sent traders rushing to withdraw metal from warehouses and premiums for immediately available physical metal have jumped.
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However, Norsk Hydro ASA, a joint-venture partner in Qatar Aluminium Ltd., said the major smelter will be able to avert a full shutdown after securing natural gas supplies.
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