Global non-ferrous metals markets are boiling over in the wake of the Middle East war. Major metal prices led by aluminum have surged, pushing an international metals index to an all-time high.
According to Bloomberg on Tuesday (local time), the London Metal Exchange (LME) index hit a record 5,651.2 at 2:54 p.m. Korea time, with gains approaching 12% over the past four weeks. The LME index is a benchmark gauge reflecting prices of six non-ferrous metals: aluminum, copper, zinc, lead, nickel, and tin.
At the center of the rally is aluminum. Since the Iran war began late last month, aluminum prices have jumped about 15%. As the Middle East accounts for roughly 9% of global aluminum production, concerns over war-driven supply disruptions have strongly stimulated the market.
The supply shock has also materialized. Iranian missile attacks late last month struck two key aluminum smelters in Abu Dhabi and Bahrain, causing production disruptions. Heightened tensions between Iran and the United States have also blocked passage through the Strait of Hormuz, compounding disruptions to raw materials transport.
Markets are focused on the possibility that the supply shortage could be prolonged. JPMorgan Chase warned in a report that "if the supply vacuum triggered by the war accumulates, the global aluminum market could fall into an unprecedented black hole situation."
Recently, however, expectations for ceasefire negotiations have also begun to emerge. Analysts say that even though the war has not fully ended, investors are flowing back into the non-ferrous metals market, supporting the price uptrend.
"Uncertainty about the war remains, but market participants are rebuilding positions," said Gao Yin, an analyst at China's Shuohe Asset Management. "In particular, as aluminum supply chain disruptions have become certain, strong buying is flowing in to seize this as an opportunity."
Copper prices are also stirring. Global commodities trader Mercuria and BMO Capital Markets projected that copper prices are likely to soon surpass their all-time high, citing expanding Chinese demand and changes in U.S. tariff policy. Copper prices have indeed risen about 11% over the past four weeks, narrowing the gap with the record closing high to around 3%.
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