LME aluminum extends 7-day rally to seven-week high on Hormuz impasse

LME aluminum rose a seventh straight session to its highest since June 23 as the Hormuz impasse kept Middle East supply blocked.

LME warehouse stocks have fallen to about 250,000 tonnes, the lowest in decades, according to exchange data. The Middle East accounts for roughly 10 percent of global aluminum output, and the waterway's closure has stalled that supply.

Prices had dropped 4.4 percent to settle at $3,379.50 a tonne on fleeting optimism over a US-Iran breakthrough before reversing as talks stalled. Monday's session saw aluminum gain as much as 1.47 percent intraday.

Aluminum last traded above $3,400 in June. The next catalyst is any movement in US-Iran negotiations, with both sides now demanding compensation from the other.

A Compensation Standoff Tightens Supply

President Donald Trump said Aug. 10 he would demand compensation from Iran for losses in the five-month conflict, instructing his representatives to include the demand in all future talks. Iran has insisted on its own compensation as a precondition for reopening the strait, which handles about 20 percent of global seaborne trade.

The hardening positions have pushed the risk premium back into base metals. Physical delivery premiums have widened in Mexico and Europe as rerouted vessels and delayed port clearances push back ingot and billet deliveries, even if a deal is reached.

Broader Commodity Contagion

The supply shock is rippling across markets. Brent crude traded near $88.00 a barrel and WTI near $82.50, both up more than 5 percent in the prior session. In China, the soda ash main contract touched 1,000 yuan a tonne, up more than 4 percent intraday, its highest since July 27.

Aluminum's move compares with a broader base-metals complex under pressure from the same chokepoint. Automakers, already facing volatile battery mineral costs, now confront rising chassis and body-panel costs, while renewable-energy projects face higher capital expenditure for solar framing and wind components.

This article is for informational purposes only and does not constitute investment advice.