Alert Triggered! Aluminum Prices Surge, Goldman Sachs Targets $3,600/Tonne
Will the Strait of Hormuz crisis keep driving prices up, or will supply chain adjustments cool the rally?
Are you bullish on aluminum stocks, or worried about downstream manufacturing pain? Share your take on the aluminum market’s next move below!
Amid the ongoing escalation of geopolitical conflicts in the Middle East, the global aluminum supply chain has suffered another heavy blow. On Wednesday this week, due to heightened navigation risks in the Strait of Hormuz, Aluminium Bahrain (Alba), one of the world’s largest aluminum producers, announced a suspension of shipments and activated the force majeure clause in its supply contracts. Following the news, London Metal Exchange (LME) aluminum prices soared by as much as 2.5% intraday, hitting $3,340 per tonne—a new high since April 2022. Year-to-date, the industrial metal has risen more than 9%, outperforming the more closely watched copper.
$Copper - main 2605(HGmain)$ $ALUMINUM FUTURES - Mar 2026(ALI2603)$
As the second most widely used industrial metal after steel, aluminum’s supply chain has been repeatedly disrupted in recent years. From bauxite mining and alumina refining to primary aluminum smelting, a breakdown in any link can trigger a chain reaction. This crisis centers on the Strait of Hormuz—the world’s most critical transportation route for energy and commodities. It is estimated that over 5 million tonnes of aluminum products from Middle Eastern smelters are shipped to global markets via the strait each year, while large quantities of bauxite and alumina are imported to the region to sustain production.
In a statement, Alba said the shipment suspension was not due to damage to its smelting facilities, but because transportation through the Strait of Hormuz faced "force majeure" factors. The company is the world’s largest single-site aluminum smelter (outside China), with an output of approximately 1.62 million tonnes in 2025. Prior to Alba’s move, Qatar’s state-owned aluminum producer had already cut production for the same reason, while major suppliers in the UAE urgently diverted inventories from other regions to mitigate the impact on customers.
Analysts at Goldman Sachs noted that if aluminum production disruptions in the Middle East last for one month, aluminum prices could further rise to $3,600 per tonne. The investment bank believes the market has not yet fully priced in the long-term risks of supply disruptions, and once logistics bottlenecks in the Strait of Hormuz are not quickly alleviated, the global aluminum market will face more widespread force majeure declarations.
This supply shock comes at a time when the aluminum market was already tightening. Earlier, the upcoming closure of Mozambique’s Mozal aluminum smelter had already made European markets feel supply pressures in advance. Now, the turmoil in the Middle East has further amplified supply chain vulnerability. Traders and investors are urgently assessing short-term and long-term supply-demand dynamics, with private warnings that logistics constraints may soon lead more producers to follow suit in declaring force majeure.
Industry analysts believe that while aluminum prices have received strong short-term support, downstream manufacturing industries will have to bear the pressure of soaring costs. If the conflict persists, the geopolitical restructuring of the global aluminum supply chain may accelerate, and the safety of navigation through the Strait of Hormuz will become a key focus of the market in the coming months.
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