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Key Moments

  • LME aluminum three-month price moved down toward $3,000/t as the earlier geopolitical risk premium was unwound.
  • Emirates Global Aluminium reported that about 7% of production pots at the Al Taweelah smelter have been restarted.
  • The restart progress supported expectations that Gulf-related supply disruptions are temporary and that lost output will return over time.

Risk Premium Fades on Improving Supply Outlook

ING analysts Warren Patterson and Ewa Manthey reported that LME Aluminium retreated toward $3,000/t as traders continued to reverse the geopolitical risk premium that had been priced in during earlier tensions in the Middle East.

They noted that the latest update from Emirates Global Aluminium (EGA) has strengthened the view that disruptions to Gulf aluminum supply are likely to be short-lived, with lost production expected to progressively return to the market, easing prior concerns about availability.

Impact of Emirates Global Aluminium Restart

“LME aluminium came under renewed pressure yesterday, with the three-month price falling towards $3,000/t as the market continued to unwind the geopolitical risk premium built up during the Middle East conflict.”

“Sentiment was weighed down by an update from Emirates Global Aluminium (EGA). It said that around 7% of production pots at its Al Taweelah smelter have been restarted, highlighting steady progress in restoring output following the missile and drone attacks earlier this year.”

FactorDetail
ExchangeLME Aluminium
Recent three-month price moveFell towards $3,000/t
ProducerEmirates Global Aluminium (EGA)
FacilityAl Taweelah smelter
Pots restartedAround 7% of production pots

Temporary Nature of Gulf Disruptions

“The update reinforced expectations that supply disruptions in the Gulf will prove temporary. Concerns over lost Middle Eastern production and shipping disruptions through the Strait of Hormuz helped lift prices sharply earlier this year. But recovering output and easing regional tensions have steadily improved the supply outlook.”

“While a significant portion of Al Taweelah’s capacity remains offline and a full recovery will still take time, the latest update reinforces expectations that lost supply will gradually return to the market. This is easing concerns over aluminium availability.”

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