Supply Chain Shock: Aluminium Scarcity Hits LME Following Iran Conflict

LME aluminium stocks have reached their lowest since 1990 due to supply-chain disruptions caused by the Iran conflict. Despite this, prices remain stable as global supply is expected to recover. Russian aluminium dominates LME stocks, held largely by one entity, while registered Indian stocks have drastically decreased.

London Metal Exchange (LME) stocks of aluminium have plummeted to their lowest levels since 1990, a consequence of the supply-chain disruptions triggered by the Iran conflict. The primary source of the metal shock stems from the Gulf, where production has decreased significantly.

The supply chain shock has not yet impacted prices significantly, as the market remains optimistic about recovery. This optimism is buoyed by reports of progress at the Al Taweelah smelter in the UAE, along with increased shipments from Indonesia and China.

Interestingly, LME stocks are largely composed of Russian aluminium, owned primarily by one entity. This creates a concentrated market, further highlighted by the drop in Indian stocks within the LME. The dynamics of this aluminium market are set to challenge the LME's trading rules as inventory pressures grow.