Aluminium price surge will depend on length of Strait of Hormuz disruption, Goldman Sachs says
Goldman Sachs said Monday the biggest risks to aluminium stem from potential disruptions to export routes and access to raw materials through the Strait of Hormuz, noting that the effect on prices should be limited if shipping disruptions are short.
Benchmark aluminium on the London Metal Exchange rose to its highest in more than a month following the joint US and Israeli strikes on Iran. Roughly 150 ships are stranded around the Strait of Hormuz, the key shipping artery between points in Asia and Europe, after the commander of Iran's Revolutionary Guards told state television Monday that any ship that attempted to transit the strait would be set on fire.
Most of the aluminium produced in the Middle East is exported to the United States and Europe. Goldman, in a Monday note, said the market is already trading well above fair value, but prices could keep rising "substantially" if disruptions persist for a month, Goldman said.
Goldman Sachs estimated that one month of full production loss from the region would reduce first‑quarter 2026 global aluminium inventory from 51 days to 48 days. Combined with a surge in energy prices, that could temporarily justify a price of $3 600 - about $400 above spot - to maintain trend margins relative to inventory.
The bank added that its base case remains for LME aluminium to average $3 150 in the first half of this year, noting that it sees substantial upside to European aluminium premiums.
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