Aluminum Prices Rise Amid Ongoing Naval Blockade in the Strait of Hormuz

Global Aluminum Prices Rise Amid Strait of Hormuz Uncertainty

The global aluminum market experienced a surge in prices on Friday, with the lightweight metal rising as much as 1.7% to $3,534 a ton on the London Metal Exchange. This increase comes as traders remain uncertain about the prospect of an imminent opening of the Strait of Hormuz, which has been a major source of aluminum shipments in recent years.

The Strait of Hormuz, a critical chokepoint in the Middle East, has been at the center of a stalemate between Iran and the US. Both countries have signaled that they are waiting for the other to move first before easing restrictions on traffic. Iran delivered a new proposal to the US, while President Donald Trump vowed to maintain a naval blockade. This lack of progress has resulted in a near-halt of shipments through the strait, which has had a significant impact on the global aluminum market.

Roughly 10% of global aluminum output comes from the Middle East, making the region a crucial supplier of the metal. Aluminum prices, which have recently hit the highest in more than four years, are likely to continue rising if the strait remains closed. According to Greg Shearer, head of base and precious metals research at JPMorgan Chase & Co., prices are likely to hit $4,000 a ton even if the strait is reopened, given the length of time required for smelters to restart and supplies to come back online.

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Other base metals were mixed on Friday, with copper holding above $13,000 a ton as China's metal fabricators restocked before the start of the country's week-long holiday. Markets were also closed in a number of other countries for Labor Day. Meanwhile, economic data from the US showed that gross domestic product expanded at a 2% annual rate over the first quarter, lifting sentiment about the health of the world's largest economy.