Aluminum Prices Hit $3,418/Ton as Bahraini Force Majeure Halts Shipments
Aluminum prices surged to $3,418 per ton, the highest since April 2022, after Aluminium Bahrain declared force majeure on shipments through the Strait of Hormuz. U.S. smelters, led by Alcoa, face tight capacity with only six primary plants and rising electricity costs limiting output expansion.
1. Middle East Supply Disruption
Aluminium Bahrain declared force majeure on shipments through the Strait of Hormuz, halting deliveries from one of the world’s largest smelters. This action pushed London Metal Exchange prices to $3,418 per ton, the highest level since April 2022, marking a 9% gain year to date.
2. Global Market Tightening
More than five million tons of Gulf-produced aluminum transit annually through the Strait of Hormuz, and analysts warn prices could reach $3,600 per ton if shipments remain suspended for a month. Prolonged logistics constraints exacerbate supply risks for Europe, Asia and North America.
3. U.S. Smelting Capacity
The U.S. retains only six primary aluminum smelters, four of which operate commercially, producing less than 1% of global supply and covering around 30% of domestic demand. Alcoa and Century Aluminum run the largest remaining facilities but face limited expansion options.
4. Energy Cost Constraints
Electrolysis for aluminum production consumes roughly 14 MWh of electricity per ton, and rising power prices driven by tech data centers erode smelter competitiveness. Difficulty securing long-term low-cost contracts hampers efforts to rebuild domestic capacity.