Inside Commodities - The Impact of the Hormuz Situation on Aluminium

Why It Matters

Hormuz disruptions threaten a critical supply corridor for GCC aluminium, tightening global inventories and sustaining price premiums that affect manufacturers and investors worldwide.

Key Takeaways

• GCC aluminium output doubled since 2010, now 6.2Mt.
• Hormuz closure threatens raw material imports for most GCC smelters.
• Emirates Global Aluminium reroutes shipments via Oman’s Sohar port.
• LME aluminium premiums surged 30% in Europe, 70% in Japan.
• Global inventories fell 6% since February, heightening price pressures.

Summary

The video examines how the escalating conflict in the Strait of Hormuz is reshaping the global aluminium market, focusing on the Gulf Cooperation Council (GCC) region’s growing role as a low‑carbon supplier. The GCC now produces roughly 9% of worldwide primary aluminium, with output rising from 2.8 Mt in 2010 to 6.2 Mt last year, making it the second‑largest producing block outside China and a key source for Europe and the United States. Key data points include the region’s reliance on imported alumina and bauxite, the vulnerability of maritime routes through Hormuz, and the swift response of producers. Emirates Global Aluminium and Aluminium Bahrain have begun diverting cargo through Oman’s Sohar port and Saudi Arabia’s Jeddah, while Qatar’s Catalam has cut output to 60% due to gas shortages. Prices on the LME have spiked to four‑year highs, with European premiums up 30% and Japanese premiums up 70%, while LME inventories have slipped another 6% since February. Notable examples underscore the pressure: Aluminium Bahrain halted shipments and shut three smelting lines, cutting 19% of capacity; the LME cash‑to‑three‑month spread remains in backwardation, signaling ongoing scarcity; and canceled warrants now represent nearly 40% of total LME stocks, up from 9% pre‑conflict. These metrics illustrate how supply chain disruptions are feeding price volatility. The broader implication is a structurally tighter aluminium market. Even as alternative shipping routes provide temporary relief, any prolonged Hormuz blockage could further constrain raw material flows, prompting additional production cuts and sustaining elevated regional premiums. Stakeholders—from downstream manufacturers to investors—must monitor logistics, inventory trends, and policy responses as the geopolitical risk persists.

Original Description

Discover how the closure of the Strait of Hormuz is impacting aluminium markerts, with expert insights into the broader consequences shaping global commodities.

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