Altercation Instigates Upheaval in Aluminum Industry
Roiling Middle East conflict sends metal markets spinning
The ongoing tensions in the Middle East have sent shivers down the spines of aluminum, copper, and zinc market players. Prices have been on a rollercoaster ride due to the volatile situation in the Persian Gulf region, with quotations reaching multi-month highs.
On June 23, 2025, the three-month aluminum futures contract on the London Metal Exchange (LME) surged 1.53%, hitting $2,580 per ton - a level not seen since March 27, 2025. By June 24, prices eased to $2,570 per ton, according to both LME and Shanghai Metals Market (SMM) data.
Copper prices, meanwhile, went on a bull run. On June 23, the three-month copper contract on LME soared 0.35%, touching $9,760 per ton - the highest since June 10 - and on June 24, it settled at $9,660 per ton, as reported by both LME and SMM. The three-month zinc futures contract surged 2.15% on June 23, reaching $2,680 per ton - a level last seen on June 4 - and remained around the same level on June 24, according to SMM data.
Ahmed Aliyev, a leading analyst at T-Investments, suggests that the rise in aluminum prices is due to anxieties over a possible closure of the Strait of Hormuz, a critical shipping route for metal exports from the Persian Gulf. The region holds around 20% of global aluminum production outside China, and these anxieties could continue to impact prices as the situation unfolds.
Pavel Karpus, a partner at S+ Consulting, adds that volatility in oil and gas markets drives up production costs and transportation costs for both aluminum and copper, exacerbating the price surge. Copper prices are also spiraling due to anticipation of U.S. tariffs and low inventory levels, with current volumes barely covering less than three days of consumption compared to six days at the end of last year.
Iran, a significant aluminum producer, has churned out 582,2 thousand tons of metal between March 20, 2025, and February 18, 2026, according to S&P Global. Iran also boasts substantial zinc reserves, with about 15 million tons, and approximately 2.6 billion tons of copper reserves - roughly 5% of known global reserves of this metal.
However, Boris Kopaikin, the chief economist at the Stolypin Institute of Economic Growth, notes that the scenario of blocking the Strait of Hormuz and a significant jump in oil prices seems less likely to materialize. He believes that the ensuing consequences for the world economy and demand for metals are unlikely. Instead, the trend will largely be shaped by production and demand within China, which is the world's largest consumer and producer of base metals.
Dmitriy Tselischev, managing director of the investment company "Ricom-Trust", forecasts that if copper supply problems arise due to a decline in the quality of ore from Chile and Peru, copper prices could shoot up to $10-10,500 per ton, which is $1-1,500 less than historical highs. He predicts that aluminum prices could inch upward to $2,8-2,900 per ton, but the trajectory could reverse due to a softening in negotiations between Iran and the US, a decrease in demand in China, an increase in copper production as South American projects resume, a relaxation of restrictions on Russian aluminum, and a strengthening of the dollar.
In conclusion, the ongoing Middle East conflict has created a whirlwind effect in base metal markets, triggering price spikes and spurring investor fears due to potential supply chain disruptions and increased energy costs. As the situation evolves, global markets will continue to react to geopolitical events, adjusting their strategies and forecasts accordingly.
In the midst of the Middle East conflict, the finance sector, particularly the aluminum, copper, and energy sectors, are experiencing a turbulent phase. The escalating unrest in the Persian Gulf region has led to anxiety over potential closures of key shipping routes for metal exports, driving up aluminum prices.
Moreover, the volatile oil and gas markets are fueling increased production and transportation costs for both aluminum and copper, contributing to the spiraling prices in the industry. Copper, in particular, is also being impacted by low inventory levels, rampant consumer demand, and the possibility of US tariffs.
