The metal market’s version of a traffic jam
Aluminum is suddenly acting like the last Uber after a concert: everyone wants it now, and nobody wants to wait. On Tuesday, three-month aluminum on the London Metal Exchange briefly hit $3,707.50 per metric ton, its highest level since March 2022, before cooling off just a bit.
The setup is basically a perfect storm. Supply from major Gulf producers has been choked by the effective closure of the Strait of Hormuz since late February, which analysts say has turned into the biggest aluminum supply shock in decades. That’s helped drain global inventories faster than a juice cleanse at a wellness retreat.
China tried to help, then got the memo
China, the world’s industrial pressure cooker, initially tried to fill the gap by ramping up smelter output. But Beijing is now leaning the other way. After a May 13 directive from the Ministry of Industry and Information Technology, authorities started inspecting energy use and emissions across heavy industry — and at least one smelter in Baise has already cut output.
That matters because when supply is tight and policy tightens too, prices can stay stubbornly high. The physical market is already flashing red: the premium for immediate delivery over the three-month contract widened to $71 per metric ton, a classic sign that buyers are getting desperate.
And just to keep things spicy...
There’s also pressure coming from upstream. Alumina futures jumped after Guinea signaled export quotas to offset shipping costs and shore up state revenues. Meanwhile, the Eurasian Economic Commission extended anti-dumping duties on aluminum tape from China and Azerbaijan through May 24, 2031, which doesn’t help the mood if you were hoping for easier global trade flows.
Big picture: aluminum is a boring metal until it isn’t. When the cost of a basic industrial input spikes like this, the ripple effects can show up in everything from packaging to autos to construction — and your favorite company’s margin math can get uglier fast.