Key insights
- Aluminum prices surged on supply constraint expectations tied to potential US-Iran deal and Middle East tensions. JPMorgan forecasts a significant aluminum deficit. Alcoa and Century Aluminum shares rose in premarket. While geopolitical risks remain, the potential for increased demand and constrained supply could lead to higher prices, contributing to inflationary pressures and potentially impacting related US equities.
Investing.com - Aluminum prices spiked to a four-year high on Thursday, supported by expectations for a potential supply constraints due to a surge in demand if the U.S. and Iran secure a deal to reopen the Strait of Hormuz.
The benchmark three-month aluminum price on the London Metal Exchange was last higher by 0.5% at $3,636.60 per metric ton by 06:47 ET (10:47 GMT), touching its highest level since March 2022.
A popular aluminum contract on the Shanghai Futures Exchange also ended daytime trading up 2.9% at 25,635 yuan per ton, its strongest point since March 9, according to Reuters.
The news agency added that analysts at JPMorgan Chase expect 1.9 million tons of primary aluminum deficit this year, the biggest since 2000, because of a loss of an estimated 2.4 million tons of supply from the Middle East.
Aluminum inventories at LME-approved warehouses and at three major Japanese ports have also fallen. Chinese stocks have declined as well, as expectations grow for more overseas orders of Chinese aluminum, Reuters reported.
Among aluminum miners in the U.S., shares of Alcoa ticked higher in premarket trading, as did Century Aluminum.
Washington and Tehran have agreed in principle to hold fresh talks, after an initial round of negotiations last weekend in Pakistan did not yield an immediate deal, the Wall Street Journal reported. Citing officials familiar with the matter, the paper said both sides have not set a time or venue for the meeting.
A fragile ceasefire between the two is due to expire on April 21.
U.S. President Donald Trump has also said talks between Israel and Lebanon will take place later today, but did not offer further details. Israel has said the discussions will take place, although the Associated Press reported that Lebanon was unaware of the talks.
Still, signs of friction in the Middle East remained, most notably over an ongoing U.S. naval blockade of Iranian ports. A top military commander in Iran has warned Washington not to continue the blockade, which U.S. Central Command has claimed has not been evaded by any Iranian-linked commercial ships and oil tankers.
(Reuters contributed reporting)