Since the onset of US-Israel and Iran conflict, the aluminium prices on the London Metal Exchange have surged without a hint of slowing down. At present, the price stands at USD 3,385 per tonne (as of March 6), gaining 4.9 per cent since February 28 (USD 3,226 per tonne), and this upward trajectory is likely to continue. Considering the potential escalation of supply chain disruptions from the Middle East due to the block of the Strait of Hormuz, ING Group, a Dutch multinational banking and financial services corporation headquartered in Amsterdam, has already projected the aluminium price to grow above USD 4,000 per tonne.

At the start of 2026, primary aluminium prices on LME were already in a bullish trend, standing at USD 3,015.50 per tonne as in early January due to a convergence of constrained supply, tightened physical availability, and US-EU’s trade policy rigidity. PricePedia’s December 9, 2025, publication had already put the price projection for 2026 in bullish territory, estimating an annual rise of 10 per cent at the end of the year. Now, the geo-political unrest in the Middle East has added a further upside to the LME price, estimating it to outperform the earlier projection.

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The Middle East, being one of the major hubs of primary aluminium production, contributes more than 8 per cent to the world production. But in 2025, the region’s primary aluminium production fall from 6.346 million tonnes to 6.159 million tonnes sent through a supply risk to the world aluminium market. To this contributed China’s capacity caps, trade dislocations due to revised policies, and imminent shutdown of South32’s Mozal, bringing further tightening to the world aluminium supply.

Hence, the average LME inventory stood at around 522,771 tonnes at the end of December 2025, down by 28.4 per cent Y-o-Y from 671,203 tonnes. Over the past three months, the inventory further plunged to 460,445 tonnes.  

Going forward, due to the closure of the Strait of Hormuz, a critical shipping route that handles an export volume of 5.14 million tonnes of primary aluminium annually, a further disruption in supply chain is expected. Besides accounting for about 9 per cent of the global aluminium production, the region contributes to even larger share of internationally traded metal.

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Moreover, despite being one of the major aluminium production hubs, the region produces only 3 per cent of global alumina and 1 per cent of bauxite, which makes it reliant of imported raw materials. So, extended disruptions in the Strait would also choke alumina and bauxite inflows into the Gulf countries, tightening global supply meaningfully.

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