The Foreign Minister of Iran’s announcement on Friday regarding the reopening of the Strait of Hormuz for the rest of the ceasefire period to grant passage for commercial vessels significantly reflected on the London Metal Exchange (LME) aluminium prices, which cooled at the close of the April 17 session after reaching another high on April 16. This indicates the massive impact of the Middle East conflict on the aluminium market movement.
The LME aluminium cash bid slipped from USD 3,678 per tonne on April 16 to USD 3,658 per tonne on April 17, marking a decline of 0.54 per cent. The offer also decreased 0.5 per cent day-on-day from USD 3,678.5 per tonne to USD 3,660 per tonne.
A similar trend was observed in the near-term contracts. LME three-month bid showed a slump of 0.17 per cent, dropping from USD 3,636 per tonne on April 16 to USD 3,630 per tonne on April 17. The offer moved from USD 3,636.5 per tonne and closed at USD 3,632 per tonne, reflecting a 0.12 per cent decline.
These trends indicate the slight relaxation in the market for the remaining period of the ceasefire, as producers in the region rely on the strait to export most of their metal to global markets and to import alumina as a key raw material.
The longer dated contracts, however, exhibited a contrasting movement. The December 27 bid inched up 1.04 per cent, settling at USD 3,122 per tonne from USD 3,090 per tonne. The offer rose by 1.03 per cent to USD 3,127 per tonne from USD 3,095 per tonne.
However, caution persists, with the Norwegian Shipowners’ Association noting that factors such as sea mines, conditions set by Iran, and practical operational considerations need to be evaluated before resuming transit.
Commenting on the matter, Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated, “Once the dust settles, we are still left with disruptions that for a shorter or longer period may keep prices elevated compared to where we came from.”
The declining trend was back in the LME 3-month Asian Reference Price, which shifted from USD 3,643.5 per tonne to USD 3,564.5 per tonne, down 2.17 per cent.