Shipping disruption through the Strait of Hormuz has cut deliveries from Middle East producers. Argus reports analysts now flag LME aluminum above $4,000/t as a real scenario, with regional premiums rising against an unprecedentedly tight supply outlook.
LME three-month aluminum hit $3,372/t on June 3, topping the earlier 2026 peak and setting a new four-year high. The supply route from Middle East producers to global consumers is the bottleneck.
This compounds existing tightness. LME inventories at ~335,000t were already at multi-year lows before the Hormuz disruption. Goldman Sachs had lifted first-half 2026 targets to the low-$3,000s, citing low global inventories and power availability concerns for new Indonesian smelters.
U.S. tariffs add another layer. Import duties on aluminum rose from 10% to 25%, then 50%, creating a two-tier market. U.S. all-in prices (LME + Midwest premium) run far above international benchmarks. The Midwest premium hit record levels.
The EU's Carbon Border Adjustment Mechanism, applying to aluminum from 2026, is reshaping trade flows toward lower-carbon producers. Combined with expected EU scrap export tariffs from spring 2026, European buyers face higher costs for both primary and secondary aluminum.
The Hormuz disruption adds a geopolitical risk premium to a market that was already tight. European buyers are most exposed — secure alternative supply routes now and model a $4,000/t scenario into your Q3 budget. The combination of Middle East supply risk, critically low LME stocks, and China's 45Mt cap means any additional disruption will compound fast.