LME registered aluminum stocks have fallen by roughly one-third since the start of 2026 to approximately 339,475 tonnes, as traders draw down exchange metal to plug gaps left by Gulf outages. The LME's benchmark cash-to-three-months spread flipped into backwardation in early March and cash is currently trading at an $80 premium, the tightest the market has been since 2007.
Physical premiums around the world have surged in response. The CME Japan spot premium has more than doubled to $316 per tonne over the LME price since the start of hostilities. The European duty-paid premium has jumped by 58% and the duty-unpaid by 75% since the beginning of March. In Rotterdam, the premium for aluminum extrusion billet has more than doubled to $1,100 over the LME base price.
US buyers face an additional squeeze from a 50% import tariff on aluminum and derivatives, which has pushed US regional premiums to record levels even before the Hormuz crisis. The combination of tariffs and the Gulf supply shock amplifies price pressure beyond what either factor would cause alone. Citi has warned of a potential rise to $4,000/t if disruptions continue.