Global Trade
May 12, 2026
Aluminum stocks to stay in red, prices to stay high as Iran war continues
Written by Stephanie Ritenbaugh
The LME price for aluminum spiked at the start of the US/Israel war on Iran and has lately hovered around $3,400-$3,600 per ton, not yet breaching $4,000.
Looking ahead, supply is going to remain tight, as inventories already were low before the conflict started in late February.
Estimates of the global deficit range between $1 million and $2 million. CRU Group, the parent company of AMU, forecasts a shortage of about 1.4 million tons in 2026, followed by about 300,000 tons in 2027.
The short term is defined by uncertainty, particularly around the reopening of the critical Strait of Hormuz to traffic.
“The markets are thinking that the closure will last for a while, which is leading us to various estimates on a deficit for this year,” said Edward Meir, a commodities analyst and contributor to AMU.
The US Midwest and Rotterdam premiums have soared. But Europe is in “a particularly dire situation,” Meir told AMU. The region is still adapting to the shutdown of Mozambique’s Mozal smelter and Century Aluminum’s repairs at its smelter in Iceland.
“Europeans were really depending on Gulf aluminum, and that’s now been taken away from them,” Meir said. “So, the premiums in Europe have really shot up, and they’ll probably work higher.”
Matthew Abrams, senior analyst at CRU, noted regional premiums have been volatile.
“Both the Rotterdam premium and the Midwest premium have risen pretty quickly over the past few months,” Abrams said. “I think we’re expecting higher prices throughout the rest of the year. There’s really no relief on the horizon.”
Looking ahead, it will take some time for inventories to recover as facilities damaged in the war are repaired.
“When you look at the stocks, they’re not really going to recover until 2029-2030 just because the production is not going to be there,” Abrams said.
In a recent report, the World Bank said its metal and mineral price index rose 13% in Q1’26 and extended its gains in April. But aluminum prices are forecast to rise by about 22% this year due to the Middle East conflict.
“Together with strong gains in copper, this is expected to lift the price index by 17% in 2026, pushing it to a record high,” the organization stated.
Prices are expected to ease by 7% in 2027 as supply conditions normalize, the group said.
“However, risks remain skewed to the upside, including stronger-than-expected data center construction, prolonged supply disruptions (partly related to the Middle East conflict), and new trade restrictions,” the organization said. “On the downside, weaker-than-expected global growth, particularly in China, could weigh on demand.”
