What to watch for this earnings season

Prices on the London Metal Exchange have risen to new highs. The three-month contract reached a fresh four-year record of $3,672 per metric ton Thursday morning as the Strait of Hormuz remains effectively closed to traffic. The US navy has enacted its own blockade on the critical shipping artery in response to Iran.

The Midwest premium held at 110-112 cents per pound for a third consecutive week, with “tight near-term supply continuing to underpin the market,” according to a recent CRU Group report. (CRU is the parent company of AMU.)

The seven-week conflict in Iran has exacerbated the tight supply situation. A fragile two-week ceasefire between the US and Iran is set to expire next week. Pakistan has stepped in to mediate a new agreement.

A drone attack at its Al Taweelah plant has led Emirates Global Aluminium (EGA) to declare a force majeure on some products. Other aluminum facilities across Gulf Cooperation Council (GCC) countries have curtailed production amid ongoing attacks. GCC countries supply about 9% of global unwrought aluminum.

Producers elsewhere are seeing increased interest from customers seeking alternative sources. For instance, Pittsburgh-based Alcoa said it has received more inquiries related to supply uncertainty in the Middle East for the second quarter and the rest of the year.

Nearly 20% of the world’s traded oil passes through the Strait of Hormuz. The head of the International Energy Agency told the Associated Press that Europe has “maybe six weeks or so” of remaining jet fuel supplies and warned of possible flight cancellations if oil supplies remain blocked.

The conflict has driven oil and gas prices higher globally. Brent crude rose to $98.69 per barrel at 3:07 p.m., up from about $70 before the conflict.

Tariffs

Of course, tariffs to create uncertainty in the market as policies shift and companies adapt.

It has been one year since President Donald Trump announced the “Liberation Day,” or “reciprocal tariffs.” The US Supreme Court rule them unconstitutional in February. They have since been replaced them with a temporary 10% global tariff under Section 122.

Earlier this month, the administration said it would collect tariffs based on the finished value of goods containing steel and aluminum, rather than on the metal content.

Data centers

Data centers have drawn attention as a competing source of electricity demand for aluminum smelters. Some producers, however, are moving to capitalized on the opportunity. Both Alcoa and Century Aluminum have invested in redeveloping idle sites into facilities for the data center sector.

These developments come as tariffs on imported aluminum remain at restrictive levels under Section 232 and access to competitively priced electricity continues to constrain domestic production. Will more companies follow suit, or will they find other ways to adapt to this shifting landscape?