Aluminum prices fall after Iran reopens Hormuz to shipping

Friday 17 April 2026 - 16:30

By: Dakir Madiha

Aluminum prices fall after Iran reopens Hormuz to shipping

Aluminum prices declined on Friday after Iran announced the reopening of the Strait of Hormuz to commercial traffic, easing supply concerns that had driven the metal to a four year high. The statement followed a 10 day ceasefire linked to tensions between Israel and Lebanon, triggering a broader pullback across commodity markets, including a sharp drop in oil prices of about 9 percent.

Iranian Foreign Minister Abbas Araghchi said the strait was “fully open” to all commercial vessels during the ceasefire period. The announcement was echoed by Donald Trump, although maritime restrictions linked to the US blockade targeting Iran bound shipping remain in place. The mixed signals have left traders weighing how durable the reopening will be and whether normal flows can resume quickly.

The decline in prices follows a strong rally that pushed aluminum on the London Metal Exchange to 3,636.60 dollars per metric ton, its highest level since March 2022. The surge was fueled by fears of prolonged supply disruption after Iran initially closed the strait in late February in response to US and Israeli strikes. The situation worsened after missile and drone attacks damaged key smelting facilities in the Gulf region, tightening global supply expectations.

Market fundamentals remain tight despite the latest price correction. Analysts at JPMorgan project a global aluminum deficit of 1.9 million metric tons in 2026, driven largely by a sharp reduction in Middle Eastern output. Exchange data shows that inventories in LME warehouses have fallen to their lowest levels in months, while the spot premium over three month contracts has surged to levels not seen since 2007, reflecting immediate supply pressure.

Corporate results also reflect the volatile environment. Alcoa reported quarterly revenue of 3.19 billion dollars, down 7.4 percent from the previous quarter due to weaker shipments and lower alumina prices. However, net income nearly doubled to 425 million dollars, supported by higher realized aluminum prices, which rose more than 12 percent quarter on quarter and boosted margins.

The ceasefire is set to expire on April 21, leaving markets highly sensitive to geopolitical developments. Analysts warn that a lasting agreement between the United States and Iran could take months to negotiate, keeping commodities in a volatile cycle where prices fall on signs of de escalation and rise quickly at any indication of renewed conflict.