Alcoa gains 4.47% as aluminium prices hit four-year high amid China and Middle East supply fears

The image used in this article is generated with an AI tool and does not depict any real-time moment

Shares of Alcoa gained sharply after aluminium prices on the London Metal Exchange (LME) climbed to their highest level in four years, supported by concerns over possible production cuts in China and continued disruptions in the Middle East.

Alcoa shares closed at USD 71.38 on May 22 before extending gains to USD 74.57 on May 26 after touching an intraday high of USD 75.57. Between the May 22 and May 26 closing prices, the stock advanced around 4.47 per cent.

The rally in the stock followed another strong move in aluminium prices. LME aluminium futures rose around 1.3 per cent to USD 3,697 per tonne as of May 26. According to LME data dated May 27, 2025, the cash offer price stood at USD 3,759 per tonne, while the three-month offer price was at USD 3,682 per tonne, marking the highest level since March 2022.

The recent jump in aluminium prices reflects growing concerns over supply tightness. Chinese smelters are currently facing inspections linked to energy consumption and emissions, increasing the possibility of future production restrictions. At the same time, disruptions in the Middle East are adding further uncertainty to global supply chains.

Despite the supply concerns, China’s aluminium industry continued operating at elevated levels, with daily aluminium production reaching a record 129,000 tonnes last month. However, traders and investors remain focused on whether tighter environmental controls could eventually slow output growth. 

Alcoa is one of the world’s largest bauxite miners and alumina refiners and operates as a vertically integrated aluminium producer with businesses spanning bauxite mining, alumina refining and primary aluminium manufacturing. The company’s earnings remain highly sensitive to movements across the aluminium value chain and broader commodity price trends.

Explore: The most comprehensive and forward-looking industry-focused report – Gulf Disruptions Roadmap: Decoding Aluminium Market Volatility, Supply Risks & Trade Flow Shifts

The company currently has a market capitalisation of around USD 19.45 billion and trades at a price-to-earnings ratio of 18.66. According to industry data, Alcoa holds a GF Score of 60 out of 100, indicating moderate long-term return potential based on factors including financial strength, profitability, growth, valuation and market momentum.

Alcoa received a financial strength score of 6 out of 10 and a profitability score of 5 out of 10, while its growth score stood at 4 out of 10, suggesting the company may face challenges in expanding its revenue base in the near term despite stronger aluminium prices.