Aluminum is poised for its fourth consecutive weekly decline, marking the longest losing streak for the metal since April 2025. This downturn is attributed to a combination of factors, including a renewed selloff in Asian technology stocks, the strengthening of the US dollar, and the expected resumption of supplies from the Middle East. The metal is on track to shed approximately 7% of its value this week.
The interim peace deal between the United States and Iran has significantly contributed to expectations of renewed aluminum shipments from the Middle East. This region is a substantial producer, accounting for nearly 10% of global aluminum production. The conflict had previously led to the closure of local smelters and hampered the flow of metals and raw materials through the Persian Gulf. The easing of tensions and the prospect of reopened shipping routes are now fueling predictions of increased supply to the market.
This decline follows earlier market movements. On June 23, aluminum prices on the London Metal Exchange (LME) fell to a three-month low after the US granted Iran a 60-day sanctions waiver. The LME cash aluminum bid price dropped to $3,263 per metric ton, a 4.11% decline from the previous day's $3,403. The benchmark three-month contract similarly decreased, with the bid price falling to $3,269 per ton from $3,405 per ton, a 3.99% reduction economies.com. Analysts had previously anticipated that the opening of the Strait of Hormuz could lead to a 5%-10% correction in aluminum prices within a few weeks of a deal, potentially pushing LME aluminum to trade between $2,850 and $2,950 per metric ton hellenicshippingnews.com.
While some producers, like Maaden, maintained near-stable production during the conflict, other GCC aluminum producers such as EGA, Alba, and Qatalum experienced impacts, operating at 30%-60% of their capacities. Full recovery for these producers is not expected until Q4 2026 at the earliest, with damaged facilities requiring three to six months, and potentially six to twelve months, to return to full capacity. Despite the current price decline due to anticipated supply, the slow process of restarting smelters suggests that underlying market tightness may persist, with potential for prices to stabilize in the $3,000-$3,200 per metric ton range in the second half of 2026 if damaged capacity remains offline longer than expected hellenicshippingnews.com. The war shock to the aluminum market was somewhat blunted by the ingenuity of producers and Chinese supply bloomberg.com.
