The metal markets are sending a clear signal: in this war, it's not bullion but aluminium that's stealing the show.
As the US-Iran conflict deepens, gold and silver have paradoxically slid as much as 3.5% — weighed down by a surging US dollar that's overpowering any safe-haven appeal. Aluminium, however, is a different story entirely.
The Numbers First
LME three-month aluminium touched $3,544 per metric ton — its highest since March 2022. In Shanghai, the most-active contract surged 3.29% to 25,310 yuan, briefly spiking to 25,860 yuan intraday. Last week alone, it posted its biggest weekly gain since January 2023.
Why Aluminium? It's All About the Strait.
The Strait of Hormuz — the narrow Gulf waterway that wars are fought over — sits at the heart of this rally. The region surrounding it produces roughly 6.5 million tonnes of aluminium annually, or nearly 10% of global output, powered by cheap energy and proximity to key shipping lanes.
Two dominoes have already fallen: Qatari smelter Qatalum has begun curbing production, and Aluminium Bahrain has declared force majeure on shipments — a legal term that essentially means: we can't deliver, and it's not our fault.
The Two-Sided Risk
Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, puts it plainly — the global aluminium market was already running tight before a single missile was fired. The conflict has simply exposed how fragile the supply chain really is.
The threat is twofold, he explains: first, logistical — the Strait is a critical chokepoint, and even if smelters keep running, stranded metal can't reach buyers. Second, operational — aluminium smelting is brutally energy-intensive, and early signs of energy disruptions are already hitting some plants.
An extended Hormuz disruption, as analyst Manthey notes, would simultaneously choke alumina inflows and aluminium exports for Middle Eastern producers — a double squeeze that would tighten global supply meaningfully.
Where Could Prices Go?
With LME aluminium already hovering around $3,450/tonne, Banerjee says a move toward $3,800–$4,000 is entirely plausible if disruptions persist.
The question isn't whether aluminium prices will respond to a prolonged conflict — they already are. The real question is whether you're positioned for it.
