Middle East war could 'rupture' already tight North American aluminum market

The Middle East war could significantly tighten supply in the already strained North American aluminum sector, experts told Platts, part of S&P Global Energy.

Increased strikes in the Persian Gulf region have led shippers to avoid the Strait of Hormuz, the main shipping artery connecting the Middle East to Europe and North America. Aluminum supply from Middle Eastern producers has been partially offsetting a significant drop in Canadian shipments to the US following the implementation of US 50% tariffs on aluminum. A loss of Middle Eastern supply would come amid dwindling North American aluminum inventories and all-time-high prices.

"With the Strait of Hormuz basically frozen right now, metal cannot make its way to North America, but it is still needed," Jean Simard, president and CEO of the Aluminium Association of Canada, a trade group, told Platts in an interview. "There is a danger of a rupture in supply because it takes time to divert shipping that has already been committed somewhere else. It's going to be a very impactful situation for the US."

The UAE and Bahrain made up 23% of US imports of unwrought aluminum in 2025, up from 16% in 2024, according to S&P Global Market Intelligence's Global Trade Atlas. The UAE and Bahrain were the second and fourth-largest suppliers to the US, respectively, behind Canada. South Africa was third.

"The knock-on effects to date of the 50% import tariffs have left the US increasingly reliant on importing metal from the UAE and Bahrain with main supplier Canada, which historically accounted for about two-thirds of US imports, having diverted a considerable amount of metal elsewhere, in particular to Europe," said Karen Norton, principal aluminum analyst for S&P Global Energy CERA.

Competition for Canadian supply

Canada shipped 2 million metric tons of unwrought aluminum to the US in 2025, down 25.9% from 2024 volumes of 2.7 million mt, according to Global Trade Atlas.

Canadian producers began diverting shipments to European customers after the US implemented 50% tariffs on aluminum imports in June 2025.

"The impact of reduced exports from the Middle East will likely hit Europe the hardest," Natalie Scott-Gray, senior metals analyst at financial services company StoneX, said in a statement. "We would expect regional premiums to elevate, with countries trying to obtain more material from Canada, India or Africa."

Despite an expected increase in competition between the US and Europe for Canadian aluminum, Simard, whose group represents aluminum giants Alcoa and Rio Tinto, says the situation is not likely to change Canadian trade flows immediately.

"The shipping that Canada has been doing to Europe over the past months because of the [US] tariff situation takes some time to start flowing back to America," Simard said. "You can't turn around on a dime in a situation like this. Canada cannot produce more metal than it is producing right now."

Simard added that the rise in the US aluminum Midwest Premium has already provided incentives for Canadian producers to ship more product to US customers, but a portion of supply has already been committed to European consumers.

"There would be no quick and easy solution to the problem for US consumers who are already paying record-high prices, unless Canadian producers ship more metal to the US," said Norton. "Otherwise, we would expect further upward pressure on the Midwest premium near term."

Traders in the North American market are waiting to see how things unfold but generally expect aluminum prices to rise.

"It will have a global effect," a trader told Platts. "Right now, it's more attractive to take Canadian metal to Europe. We just need to wait and see, but for sure the bias is for higher premiums now."

Platts assessed the spot 99.7% P1020 US Aluminum Transaction Premium at 105 cents/lb plus LME cash, delivered Midwest, net 30-day payment terms, on March 2, up 1 cent from Feb. 27.

The assessment, known as the Midwest Premium, is at an all-time high. It is up 149% year over year, primarily due to US tariffs on aluminum.