Aluminium climbs on supply fears as Iran conflict escalates

Aluminium prices extended gains on Wednesday as supply worries deepened after Norway's Norsk Hydro announced a controlled shutdown in its aluminium joint venture in Qatar amid a widening war in the Middle East. The region accounts for around 8% of global aluminium capacity. Supply concerns are materialising as the conflict spreads to neighbouring countries, following the Qatalum shutdown and Iran's threat to target ships attempting to transit the Strait of Hormuz. The most-active aluminium contract on the Shanghai Futures Exchange closed daytime trading 2.31% higher at 24,795 yuan ($3,585.11) a metric ton. The benchmark three-month aluminium on the London Metal Exchange rose 1.60% to $3,303 a ton as of 0700 GMT. Norsk Hydro announced the Qatalum shutdown on Tuesday after its gas supplier warned of an impending supply halt. The company said it had issued a force majeure notice to customers as the curtailment continues, with the shutdown expected to last until end-March and a full restart potentially taking six to 12 months. The disruption "hits a market that was already tight," Ewa Manthey, commodities strategist at ING, said in a note. "Prior to the conflict, our aluminium balance showed a deficit of around 600kt in 2026. China's capacity cap, trade dislocations and the imminent shutdown of Mozal were already constraining supply," Manthey said, adding that dropping LME inventories, elevated premiums and tightening spread between the LME cash contract and benchmark three-month indicated tight supply even before the conflict. A stronger U.S. dollar continued to cap aluminium's gains. Elsewhere, the most-active copper contract in Shanghai declined 0.73% to 101,660 yuan a ton, and the benchmark copper was up 0.58% at $13,030 a ton. Citi analysts warned that the Iran conflict could push copper prices below $12,000 a ton in the near term, as continued disruption would keep pressure on the macroeconomic backdrop and dent demand for metals. They added that fading expectations for interest-rate cuts by the Federal Reserve and softer cyclical growth forecasts have also contributed to downward pressure on prices. Elsewhere on SHFE, zinc dropped 0.59%, lead declined 0.38%, tin plunged 5.17% and nickel edged 0.12% higher. Among other LME metals, zinc added 0.52%, lead rose 0.44%, nickel gained 1.20% and tin climbed 2.79%.