Copper-Aluminum Divergence: Strait of Hormuz Closure Chokes Alumina Supplies, Aluminum Prices Surge to Four-Year Highs

Key Points

• Strait of Hormuz closure choking 60% of regional alumina supply
• Aluminum prices at four-year highs around $3,500 per ton
• Alcoa shares up 12.45%, Century Aluminum up 23.66% since conflict began
• Analysts warn oil above $150/barrel could significantly disrupt global growth

Full Details

The effective closure of the Strait of Hormuz is choking off the flow of alumina, the key input for aluminum smelting, creating significant supply disruptions in the global aluminum market. As much as 60% of the region's alumina supply passes through the strait, meaning even intact production facilities face looming shortages due to transportation constraints. This dual shock of lost production and constrained inputs has sent prices on the London Metal Exchange sharply higher, with aluminum now trading around $3,500 per ton, near four-year highs. Meanwhile, aluminum producers such as Alcoa Corporation and Century Aluminum Company have seen their shares surge by 12.45% and 23.66% respectively since the conflict began. Bloomberg Intelligence analysts warned that if oil prices climb above $150 per barrel, it would significantly disrupt global growth.