Aluminum prices soar to a new high since 2022, Bahrain Aluminum halts partial deliveries citing force majeure

The conflict between Iran and the U.S. has impacted the global aluminum market, with shipping through the Strait of Hormuz being disrupted, triggering a supply chain crisis. Traders warn that if the situation is not quickly resolved, a wave of force majeure declarations could follow.

According to Bloomberg, Aluminium Bahrain BSC (Alba) has invoked force majeure clauses in supply contracts with some customers, suspending metal deliveries. The company officially confirmed this move on Wednesday. Driven by this news, London aluminum prices surged by as much as 4% in a single day, the largest daily increase since November 2024, reaching the highest level since 2022.

Alba stated that the force majeure declaration is due to transit disruptions in the Strait of Hormuz and is unrelated to any operational interruptions or damage to its smelting facilities. Traders and investors are scrambling to assess the short-term and long-term impacts of this crisis. According to sources, logistical bottlenecks could soon lead to a wave of force majeure declarations across Europe, Asia, and the U.S., resulting in spot supply shortages for manufacturers.

Alba declares force majeure, aluminum prices hit four-year high

Alba is a major aluminum supplier in the Middle East, with an annual capacity of over 1.6 million tons, making it one of the largest single-site aluminum producers in the world. It has long supplied primary aluminum stably to Europe, Asia, and other regions. The current halt in shipping through the Strait of Hormuz directly impacts the company’s ability to deliver abroad.

Aluminum is the second most widely used industrial metal after steel, extensively used in automotive parts, household appliances, beverage cans, and window frames. Manufacturers favor aluminum because of its abundant reserves and lower costs compared to copper and other competing materials.

However, the aluminum market has experienced cyclical supply shocks in recent years, exposing vulnerabilities in the complex supply chain from bauxite mining, alumina refining, to aluminum smelting—many of which involve highly specialized products that are difficult to quickly replace.

Disruption in the Strait of Hormuz fuels supply chain crisis

The blockade of the Strait of Hormuz has caused substantial chaos among global aluminum traders. As a critical shipping route, daily delays trigger chain reactions in the market. Since many manufacturers rely on just-in-time procurement, even brief supply interruptions can severely impact factory operations.

Although Trump promised on Tuesday that the U.S. Navy would escort oil tankers and other commercial ships through the Strait, traders remain skeptical about whether normal passage can be quickly restored. Bloomberg reports that Qatar’s state-owned aluminum producer has been forced to cut production, while the UAE’s largest aluminum supplier is urgently seeking outside-region stockpiles to mitigate supply disruptions to customers.

Multiple supply pressures converge, market bets on further aluminum price increases

This geopolitical shock, combined with existing multiple supply pressures, has significantly boosted bullish confidence in the aluminum market. Bloomberg reports that Western markets are facing smelter shutdown issues, which have previously supported aluminum prices. The disruption of shipping through the Strait of Hormuz further exacerbates supply-side uncertainties.

Against this backdrop, many traders and investors are betting that aluminum prices will see larger upward movements, believing the market is gradually shaking off its long-standing oversupply issues.

Meanwhile, other metals are also strengthening. Nickel prices rose by 2.2%, with nickel inventory withdrawal requests at LME warehouses reaching their highest level since November last year, indicating a recovery in physical demand.

Risk Warning and Disclaimer

Market risks are inherent; investment should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their particular circumstances. Investment involves risk, and responsibility rests with the individual investor.