EGA reroute eases aluminium supply crunch as LME prices soften 0.28% to US$3,242.5/t

UAE – London Metal Exchange aluminium cash prices have softened 0.28 percent to US$3,242.50 per tonne as Emirates Global Aluminium secured alternative export routes through Oman’s Sohar port, easing supply fears triggered by the closure of the Strait of Hormuz.

The Middle East conflict has blocked the strategic waterway for three weeks, disrupting global trade flows for approximately 5 million tonnes of aluminium shipped annually through the strait, about 9 percent of world supply.

EGA’s rapid response involves trucking alumina feedstock to UAE smelters and exporting finished aluminium through the Omani port, with Aluminium Bahrain considering similar routes via Jeddah.

By the Numbers: Price Movements

LME cash aluminium prices fell from US$3,251/US$3,251.50 per tonne on March 23 to US$3,242/US$3,242.50 per tonne on March 24, a decline of 0.28 percent.

The three-month contract softened more modestly, with bid prices easing 0.09 percent to US$3,217 per tonne and offer prices slipping 0.12 percent to US$3,218 per tonne.

December 2027 contracts declined 0.27 percent to US$2,965 per tonne, while the three-month Asian Reference Price rose 1.91 percent to US$3,260 per tonne, a premium reflecting continued regional distribution challenges. LME opening stocks edged lower to 427,675 tonnes.

Analyst Perspectives: Volatility Persists

Bart Melek, head of commodity strategy at TD Securities, warned that despite the drop from recent highs, prices are expected to remain elevated due to the growing supply squeeze caused by the Middle East conflict and production disruptions.

Melek noted that over 5 million tonnes of primary metal are shipped through the Strait of Hormuz annually, meaning prolonged closure could trigger further production stoppages.

Jorge Eduardo Dyszel, an LME trainer and risk management consultant, observed that the recent decline reflects a volatile market scenario caused by a transition from conviction buying to forced selling and cash positioning.

Supply Chain Realities

The alternative route faces practical limitations. Alba is idling approximately 19 percent of its 1.62 million-tonne annual capacity and has declared force majeure, while Qatar’s Qatalum operates at about 60 percent of its 650,000-tonne capacity.

Analysts note that Saudi Arabia lacks a rail connection between its east and west coasts, meaning trucking capacity may prove insufficient if all industrial companies simultaneously seek overland routes.

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