ING Commodities Strategist Ewa Manthey notes that LME aluminium prices have jumped to a one‑month high as Middle East tensions revive supply concerns. She argues that risks are focused on regional physical premiums, especially in Europe and the US, rather than a broad tightening of global supply.

Regional premiums seen more vulnerable

"LME aluminium prices jumped 3.5% this morning, a one-month high, with rising Middle East tensions reintroducing supply risks into the market"

"Escalation in the conflict between the US/Israel and Iran primarily increases upside risks to physical aluminium premiums, rather than materially tightening global supply. The Middle East accounts for around 8% of global aluminium capacity and is heavily reliant on the Strait of Hormuz for both metal exports and alumina imports, with key producers including Saudi Arabia, the UAE and Bahrain."

"The scale of any supply disruption will depend on how long tensions persist, given smelters typically hold around three to four weeks of alumina inventories, meaning short disruptions are manageable – but prolonged disruption would quickly translate into production risk."

"Even without a full closure of the Strait, higher freight costs, war‑risk insurance and vessel delays would likely be reflected first in regional premiums. Europe and the US are most exposed, given their reliance on Middle Eastern metal as marginal supply. European premiums look particularly sensitive, given already tight primary availability and elevated duty‑paid and duty‑unpaid premiums. US Midwest premiums are structurally high due to tariffs, limiting near‑term upside but leaving marginal pricing exposed to Gulf-related disruptions."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)