Metals on edge: Middle East war may tighten global aluminum markets

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Escalating conflict in the Middle East is putting aluminum supply routes at risk, pushing some premiums to new record highs.

The Middle East accounts for close to a tenth of global refined aluminum output, and more than a fifth if you strip out China. 

Any hit to product flow from the conflict in the region is likely to show up quickly in importing markets as short-term volatility. 

Aluminum already faces risks of disruptions to smelting capacity in the region and higher global power prices, which, alongside high freight, have pushed LME prices higher and tightened margins.

The global primary aluminum market is tight already.

The Platts Midwest Premium, a key benchmark for primary aluminum, was already at a sustained record high in the two weeks before the conflict and jumped even further in early March.

Aluminum prices and regional premiums could climb further if tensions linger, turning a regional flashpoint into a global cost problem for the metal.