Aluminium prices surged to a four-year high in London on Monday as geopolitical tensions in the Middle East and renewed supply concerns triggered by US–Iran developments disrupted market sentiment and tightened expectations for global shipments. On the London Metal Exchange (LME), aluminium rose 3.1% to settle at $3,607.50 per metric ton, marking one of its strongest levels in recent years. The rally comes amid heightened uncertainty over supply routes from the Persian Gulf, which account for a significant share of global industrial metal flows.

Market volatility intensified after reports that US President Donald Trump ordered a blockade affecting Iranian port activity following a breakdown in US–Iran peace negotiations. The development has raised concerns over potential disruptions in shipping lanes and export logistics, particularly through strategically vital corridors linked to energy and industrial commodities.

Spot aluminium contracts also strengthened sharply compared with futures, widening the premium for immediate delivery. The cash-to-three-month spread increased by as much as 43% from the previous session, reaching $95.50 per ton — the highest level recorded since 2007. This market structure, known as backwardation, indicates strong near-term demand and limited availability of immediate supply.

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Analysts said the price surge reflects a combination of geopolitical risk and tightening physical markets, especially as disruptions in the Middle East have already impacted production capacity. Emirates Global Aluminium PJSC, one of the region’s largest producers, has reportedly invoked force majeure clauses on some shipments after operational disruptions linked to recent conflict-related damage.

The Middle East accounts for roughly 9% of global aluminium production, making the region’s stability critical for international supply chains. So far this year, aluminium futures have climbed around 20%, supported by persistent supply constraints and intermittent disruptions linked to the ongoing regional conflict. Other base metals also traded higher, although analysts warned that broader demand risks remain due to elevated energy costs and slowing industrial activity. Higher energy prices are particularly significant for aluminium production, which is highly power-intensive and sensitive to electricity costs.

In China, the world’s largest consumer of aluminium, inventories have risen to their highest level since 2020, signalling weakening domestic demand. Analysts suggest that this may limit further upside in global prices despite tight physical supply conditions elsewhere. Market observers noted that while short-term prices are being driven by supply shocks, longer-term trends will depend on industrial demand recovery and the trajectory of global economic growth amid ongoing geopolitical uncertainty.

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