Aluminum prices experienced a notable decline, with LME three-month aluminum settling at $3,405/t for the week ended June 19, 2026, marking a 3.8% decrease from $3,540/t the previous week. On June 15, 2026, aluminum futures on the LME dropped 4.4%, closing at a two-month low of $3,379.50 per metric ton, the lowest settlement price since March 27. This downturn was primarily driven by the easing of geopolitical tensions in the Middle East and progress in US-Iran ceasefire discussions, which reduced concerns about prolonged supply disruptions.
The prospect of a broader US-Iran agreement and the conditional reopening of the Strait of Hormuz led to a rapid unwinding of the geopolitical premium that had been built into aluminum prices during the conflict. While the Strait of Hormuz is crucial for oil, its role in the global aluminum supply chain is also significant, serving as a passage for both inbound raw materials like alumina and bauxite, and outbound finished aluminum from Middle Eastern smelters to Asian and European markets. The conflict had previously caused a regional output contraction of approximately 35% year-on-year by April 2026, due to disrupted raw material shipments, blocked exports, damage to smelting facilities, and surging insurance premiums for vessels.
Despite the immediate price drop, the market outlook suggests potential for an additional 5-10% correction in the near term as the remaining war premium fades. However, the downside is likely constrained by the slow recovery of supply in the Gulf region, where major producers are operating at only 30-60% of pre-war capacity. The global aluminum market is still projected to remain in deficit through 2026 due to challenges in smelter restarts, workforce mobilization, and logistics normalization. Some analysts, like JPMorgan Chase & Co., have trimmed their price forecasts, noting that a move to $4,000 a ton is taking longer than expected due to strong supply responses from Asia and a drawdown in hidden inventories, while Goldman Sachs Group anticipates prices moving towards $3,000 a ton over the coming year.
