Aluminum prices climbed to their highest level in four years on Thursday, driven by expectations that demand could surge and tighten supply if the United States and Iran reach an agreement to reopen the Strait of Hormuz.
On the London Metal Exchange, benchmark three-month aluminum futures rose 0.5% to $3,636.60 per metric ton by 06:47 ET, marking their highest level since March 2022.
In China, the most actively traded aluminum contract on the Shanghai Futures Exchange closed the daytime session up 2.9% at 25,635 yuan per ton, its strongest level since early March, according to Reuters.
Analysts at JPMorgan Chase estimate that the global aluminum market could face a deficit of 1.9 million tons this year—the largest shortfall since 2000—largely due to an anticipated loss of around 2.4 million tons of supply from the Middle East.
Inventory levels have also been declining, with stocks at LME-approved warehouses and major Japanese ports falling, while Chinese inventories have dropped as expectations rise for increased export demand, Reuters reported.
Shares of U.S.-based aluminum producers, including Alcoa (NYSE:AA) and Century Aluminum (NASDAQ:CENX), moved higher in premarket trading.
On the geopolitical front, Washington and Tehran have agreed in principle to hold another round of talks, following initial discussions in Pakistan that failed to produce an immediate agreement, according to the Wall Street Journal. Officials cited in the report said no date or location has yet been set.
A temporary ceasefire between the two sides is currently due to expire on April 21.
U.S. President Donald Trump also indicated that talks between Israel and Lebanon are expected to take place later in the day, although further details were not provided. Israel has confirmed the discussions, while reports suggest Lebanon may not yet be aware of them.
Despite diplomatic efforts, tensions in the Middle East remain elevated, particularly due to an ongoing U.S. naval blockade of Iranian ports. A senior Iranian military official has warned Washington against continuing the blockade, while U.S. Central Command maintains that no Iranian-linked commercial vessels or oil tankers have managed to bypass it.